What happened this week

Strong start to the week for Bitcoin and crypto markets

This extraordinary week started off with a quiet Monday morning in the crypto markets, quickly turning into a rally on Monday afternoon just as U.S. markets opened. Bitcoin closed the day up more than 5% and ETH was up over 2% at the daily close on Monday evening, while traditional markets closed slightly in the red, with the S&P500 closing at -0.47%.

In other news, MicroStrategy communicated on Monday their latest purchase of an additional 3’000 BTC for roughly $140 million at an average price of $51’813 and now hold 193’000 BTC at an average price of $31’544. Although inflows for the Bitcoin spot ETFs decreased slightly the week before, MicroStrategy’s actions speak for themselves, or at least showcase Michael Saylors unwavering conviction. In other news on Monday Binance’s $4.3 billion payment in the U.S. plea deal was approved by a judge.

Tuesday marked another strong day for Bitcoin and the crypto markets, with BTC, ETH and other crypto assets reaching new (temporary) yearly highs. The rally was likely fueled by the news regarding the $519M inflows of Bitcoin spot ETFs on Monday, swiftly followed by higher ones on Tuesday, $576 million, as also visible in the chart below. Movements were accompanied by remarkably high trading volume, with a cumulative trading volume of more than $3 billion on Tuesday alone.

Bitcoin back above $60’000 on Wednesday

Bitcoin went on another surge on Wednesday, trading above $60’000 again for the first time since November 2021, just days after it reached its current all-time high of $69’000 on November 10, 2021. Along with the rise in crypto assets valuation, the crypto fear and greed index reached a new yearly high as well on Wednesday, reaching 82 (extreme greed) for the first time in over a year.

U.S. equities experienced a quiet first few days of the week, with the S&P500 holding steady above its psychological level of 5’000 points. Gold is also holding above $2’000 but trading in sideways since November 2023. Interestingly, light crude oil futures reached a new yearly high on Wednesday, trading just below $80 on Wednesday afternoon.

Crypto stocks like COIN and MSTR also surged to new highs, with MSTR reaching its highest level since February 2021, trading just below $1’000 on Wednesday afternoon.

Bitcoin closed the day on Wednesday up almost 10% at $62’543, the highest daily close since November 15, 2021, and ETH closed Wednesday up 4% at $3’386, the highest level since April 2022. On Wednesday evening, at around 6 p.m. CEST, Bitcoin reached $64’000 and corrected down to $59’000 in a matter of minutes, resulting in long and short liquidations of almost $200 million, with the total liquidations on Wednesday being above $700 million.

Wednesday was a record day for spot ETF inflows; total inflows for the day were $674 million, the highest level of daily inflows recorded since the launch on January 11. Trading volumes for the newly introduced U.S. BTC ETFs surged to $7.7 billion on February 28th, more than doubling their previous high and showcasing a remarkable appetite for digital assets among investors.

Second highest monthly close in history

Bitcoin closed the month of February up nearly 45%, marking its sixth straight positive monthly close and its best monthly performance since December 2020. BTC closed the month just above $61’000, resulting in the second-highest monthly close in its history. Ethereum closed February with a gain of more than 47%, which also continues its run to the upside with a sixth green month and its best monthly close since July 2022.

On Thursday, the brokerage units of Bank of America Corp.'s Merrill Lynch and Wells Fargo communicated that they are offering Bitcoin spot ETFs to clients, with the banks first offering the approved ETF product to some wealth management clients with brokerage accounts.

Additionally, rumor has it that Morgan Stanley is evaluating offering BTC spot ETFs to their clients. The arrival of broker-dealers and investment advisors like Morgan Stanley as well as large, registered investment advisor (RIA) networks could bring more investment into the new products. It remains to be seen whether they will start offering the products soon; Morgan Stanley declined to comment on this.

In other news, BlackRock announced on Thursday that they will launch a BDR of the iShares Bitcoin Trust ETF in Brazil, in partnership with the country's stock exchange operator, B3.

Our Take

This week was, without exaggeration, a record-breaking week for digital assets. Not only did Bitcoin manage to reclaim $60’000, but so did trade volumes and inflows in ETFs surpass even the most optimistic expectations. The question that’s on our minds now is: How much longer can this go on? On one side, volume and net inflow have seen higher highs over the past few weeks and seem like they will continue to drive this rally. On the other hand, last night GBTC outflows shot up to $600m again – with some speculating Genesis might use current euphoria to rid themselves of their shares worth >$1.5B and funding rates have started to overheat.

However, open interest for BTC is largely in CME’s futures, where cash collateral needs to be posted and clientele is rather institutional (therefore tends to use futures for hedging, rather than leverage). Looking at marginal transfers from long- to short-term holders, considering the halving around the corner on April 20th and that retail traders might not have arrived yet in full force, there are also arguments for a possible continuation.

The Week Ahead

Wednesday, March 6, 2024

• GER - Balance of Trade
• CA - BOC Interest Rate Decision
• U.S. - JOLTs Job Openings

Thursday, March 7, 2024

• CN - Balance of Trade
• EUR - ECB Interest Rate Decision

Friday, March 8, 2024

• U.S. - Nonfarm Payroll
• U.S. - Unemployment Rate

Saturday, March 9, 2024

• CN - Inflation Rate YoY