By Coinrule
Each day, Coinrule will run the rule over the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets
The Bitcoin ETF was the main crypto narrative driver over the past several months. Expectations ran high, so did markets with Bitcoin nearly doubling in price between September and the eventual approval on January 10. What was less clear was if this was always going to be a ‘buy-the-rumour-sell-the-news’ event. After all, the narrative had played out and a lot of cryptos, not just Bitcoin, had climbed multiples. This seemed like a good time for markets to take a breather.
When Bitcoin briefly tipped below $40k amidst outflows from Grayscale’s GBTC fund, the longest-running spot Bitcoin fund that had now been converted to an ETF, bears seemed to be proven right. But the strength in the market surprised many. The other ETFs, leading among them Blackrock’s IBIT, have seen over $8.5 billion in net inflows. Both Blackrock and Fidelity now hold more than $3 billion of Assets under Management in their respective Bitcoin ETFs.
The crypto macro remains positive.
But also under the hood a lot of new interesting narratives are taking off. The SEC will need to make a decision on an Ethereum ETF by the end of May and the next Bitcoin Halvening is approaching in April. Even better, technological narratives like cross-blockchain interoperability are starting to show some progress.
The Ethereum Dencun upgrade will make transactions on so-called Layer 2s much cheaper. Restaking, a way to use staked Ether to also secure other Blockchains, looks promising. We are not yet in a bull market but the themes of what will drive it are starting to become visible.
What could take out some wind from the sails in the crypto and bitcoin market? Global macro is looking uncertain with the Federal Reserve’s Bank Term Funding Program (BTFP) expiring in March. Wars in Ukraine, Gaza, tensions around the Red Sea and with Iran are providing a constant backdrop of risk that could quickly turn into a Black Swan event.
Some readers might remember, we were in a similarly positive momentum in early 2020. Then COVID struck and markets experienced new lows. What followed though was the Bull Market of 2021. For now, the Bullish Momentum remains strong.
