23 Nov 2023
Week 47, 2023 - Weekly Market Outlook
The weekly market outlook article provides a brief analysis of the past week's market performance and an outlook for the upcoming week.
Introduction
In this weekly market outlook, we examine the most recent updates in the cryptocurrency ecosystem. With an emphasis on Bitcoin, Ethereum and the macro environment, we analyze recent price action. We evaluate the global cryptocurency market cap, DeFi stablecoin flow and do a short review of the crypto market's biggest gainers and losers. Finally, we evaluate the performance of the Flagship Portfolio Vault.
Notable news
- Grayscale has recently filed a new application, intending to convert GBTC directly into a spot Bitcoin ETF.
- The window for the SEC to approve twelve Bitcoin ETFs is still running.
- CME (where institutions trade Bitcoin Futures) volume surpasses Binance. This could be a bullish indicator for institutional interest in Bitcoin
- Black met with the SEC to discuss their Spot Bitcoin ETF
- Elon Musk announched an AI chatbot capable of outperforming ChatGPT called "Grog". The similarly named Memecoin saw a significant price surge.
Macro
The recent economic trends in the United States, marked by a decrease in jobless claims and a significant slump in home sales, present a complex picture of the current state of the economy and its implications for risk assets like cryptocurrencies.
Firstly, the jobless claims in the U.S. have seen a notable drop. Initial claims for state unemployment benefits decreased by 24,000 to a seasonally adjusted 209,000 for the week ending November 18, reversing a previous rise to a three-month high. This decline in jobless claims suggests a still robust labor market, albeit one that is gradually slowing down. Factors such as higher interest rates are believed to be cooling demand in the economy. Despite this decline, there are indications of a broader moderation in the labor market, with signs of increased joblessness extending from higher-income to middle- and lower-income groups. Additionally, there has been a notable slowdown in job-to-job moves, pointing towards slower hiring and workers' reluctance to change jobs amid economic uncertainties.
On the other hand, the U.S. housing market is experiencing a significant downturn. In October, existing home sales fell to their lowest level in over 13 years, dropping 4.1% to a seasonally adjusted annual rate of 3.79 million units. This decline is attributed to high mortgage rates—the highest in two decades—and a lack of available houses, which have collectively driven buyers away from the market. Year-on-year, home resales plunged 14.6% in October. The housing inventory has also decreased by 5.7% compared to the previous year, and most homeowners, benefiting from mortgage rates under 5%, are reluctant to sell, further tightening the supply. Despite the lower sales, house prices continue to rise, with the median existing house price increasing 3.4% year-on-year to $391,800 in October.
The labor market's strength, as indicated by the falling jobless claims, can instill confidence in the economy, potentially boosting investor sentiment towards riskier assets like crypto. However, the slowing down of the labor market and rising joblessness among various income groups might also create caution among investors.
Bitcoin
Bitcoin's market movements this week were characterized by relative stability in its range, with the price exceeding $38,000. With the window for the ETF approvals still open, but the deadline closing in, excitement seems to continue to build up and be priced in.
The U.S. Securities and Exchange Commission (SEC) recently conducted meetings with Grayscale Investments and BlackRock regarding their respective applications for spot bitcoin ETF listings. Grayscale discussed the conversion of its Grayscale Bitcoin Trust into a spot bitcoin ETF, following a new registration statement and a court directive for the SEC to re-review their application. Simultaneously, the SEC held a separate meeting with BlackRock and Nasdaq employees, focusing on the proposed listing of the iShares Bitcoin Trust on the NASDAQ under specific trading rules. These discussions highlight the ongoing interest and developments in the field of cryptocurrency-based financial products.
Ethereum
The news of the ETF application has already caused a short-term positive price movement for Ethereum, surging above $2,050 this week. If approved, the increased buying from institutional investors might create even more upward price pressure on Ethereum. However, the absence of staking rewards in the ETF format might impact the demand for spot ETH ETF.
The active supply of Ethereum has reached record lows, as evidenced by recent data. Only 39% of Ether's supply has moved in the past year, marking the lowest activity since data collection began in 2017. To put this into perspective, over 86% of Ethereum's supply was active between July 2016 and 2017, highlighting a significant decrease in recent activity. This reduction in the active supply of Ethereum could be indicative of various market behaviors, including increased holding or decreased trading activity among Ethereum holders
Top Gainers and Losers
As top performer this week: Zephyr Protocol with over a 124% gain. Zephyr protocol is an over-collateralized privacy focussed stablecoin protoco
Other notable mentions are Akash Network which i is open-source Supercloud that lets users buy and sell computing resources and Skale Network, a limitlessly scalable, fast, on-demand blockchain network with zero gas fee
The worst performing asset this week is Yearn Network, which is the the utility token of the NEO blockchain. GAS surged over 300% recently. The main reason for the surge is linked to the GAS/KRW pair on the Upbit exchange in Korea, but the price seems to be retracing after this steep price increase.
Global Market cap
The total market capitalization of the cryptocurrency ecosystem has seen a growth in the past week, growing from $1.48 trillion to $1.49 trillion in the past 7 days. Only today, we saw the market cap increase with over 0.5%. This could indicate that new money is flowing into the cryptocurrency ecosystem, contributing to a bullish market sentiment.
Stablecoin Flows
The total market capitalization of stablecoins has remains around its level at $125 billion. The Total Value Locked (TVL) of stablecoins in DeFi has remaind steady at $84 billion for the last 7 days.
Flagship Portfolio Vault Performance
Over the past 7 days, the share price of the Portfolio Vault went from 34.49 to 35.01, which is a 1.5% increase.
The weakness of the dollar combined with the overall market sentiment due to the ETFs, global market cap growth, growth of stablecoin Total Value Locked (TVL) and Bitcoin's sustained strength relative to traditional markets, results in our risk profile remaining at bullish.
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Disclaimer: Nothing on this site should be construed as a financial investment recommendation. It’s important to understand that investing is a high-risk activity. Investments expose money to potential loss.
