- Cryptoasset performances showed large dispersion amid a sell-the-news type of correction in the price of Bitcoin
- Our in-house “Cryptoasset Sentiment Index” has declined and is signalling a slightly bearish sentiment
- Daily fund flows into crypto ETPs reach the highest level ever recorded during the week of the ETF approvals (Chart-of-the-Week).
Chart of the Week
Performance
Last week, cryptoasset performances saw a very large dispersion with a significant underperformance of Bitcoin, despite the spot Bitcoin ETF approvals in the US. One of the main reasons for this was that relatively high market expectations regarding the amount of Bitcoin ETF fund flows were significantly underwhelmed. Before the trading launch, Bloomberg ETF analysts had expected up to 4 bn USD in total US ETF inflows on the very first alone.
Although we saw the highest daily Bitcoin ETP inflow numbers ever recorded, the flows still fell short of even higher consensus expectations. In addition, the attention on the subject reached a climax with “bitcoin ETF” Google search queries reaching an all-time high. Excessively high Google search queries tend to be a contrarian sell signal. In hindsight, it appeared to be a “sell-the-news” type of event.
In addition, outflows from the biggest Bitcoin fund in the world, the Grayscale Bitcoin Trust accelerated over the past 2 trading days which somewhat counteracted the positive inflows into other products. This could be related to either the relatively higher fees (1.5%) or the fact that previous investors were able to finally redeem their shares with the conversion of the trust into an ETF.
Today, US financial markets are closed due to the Martin Luther King Jr. Memorial Day but the coming days will be very important with regards to the momentum of these fund flows. In general, fund flows tend to be very pro-cyclical with most of the buying happening at cyclical tops while least is bought at cyclical bottoms.
Given the recent price weakness in Bitcoin, it is quite likely that Bitcoin fund flows will level off somewhat as well. That being said, there is still some catch-up in flows to be expected as many major US financial institutions have deterred their clients from investing into these newly issued Bitcoin ETFs. Moreover, Bitcoin investments in IRAs that were previously invested into Grayscale's Bitcoin Trust need at least one week to switch to new spot Bitcoin ETFs which implies a certain time lag between sales in GBTC shares and new inflows into ETFs.
The key takeaway is that most of the “eligible” flows into Bitcoin ETFs won't happen overnight.
Before the recent trading launch last week, we had estimated that around 34 bn USD is likely going to be invested into Bitcoin ETFs with a cumulative price effect of approximately 87% over the medium term. Read the full report here.
In general, among the top 10 crypto assets, Ethereum, TRON, and Cardano were the relative outperformers.
Altcoin outperformance vis-à-vis Bitcoin accelerated significantly compared to the week prior, with 80% of our tracked altcoins managing to outperform Bitcoin on a weekly basis.
The majority of this outperformance happened just right before the US approval in the US which, counterintuitively, supported Ethereum and other altcoins more than Bitcoin.
Sentiment
Our in-house Cryptoasset Sentiment Index has recently declined and currently signals a slightly bearish sentiment. At the moment , only 4 out of 15 indicators are above their short-term trend.
Compared to last week, we saw major reversals to the downside in Crypto Fear & Greed Index and BTC 25-delta 1-month option skew.
Despite the recent decline, the Crypto Fear & Greed Index still remains in "Neutral" territory as of this morning.
Meanwhile, our own measure of Cross Asset Risk Appetite (CARA) has recently stabilized at lower levels after having decreased significantly heading into year-end. Overall this is still signalling a decline in risk appetite in traditional financial markets.
Performance dispersion among cryptoassets has recently increased considerably. In general, high-performance dispersion among cryptoassets implies that correlations among cryptoassets have decreased, which means that cryptoassets are trading more on coin-specific factors and that diversification among cryptoassets is high.
At the same time, altcoin outperformance has also increased considerably with the outperformance of Ethereum vis-à-vis Bitcoin. 80% of our tracked altcoins have outperformed Bitcoin on a weekly basis. In general, high altcoin outperformance tends to be a sign of increasing risk appetite within cryptoasset markets.
Fund Flows
Last week, there was clear focus on the spot Bitcoin ETF approval on Wednesday and subsequent trading launch on Thursday. In fact, Thursday saw the highest daily fund flows into Bitcoin ETPs ever recorded.
In aggregate, we saw weekly net fund inflows into all types of cryptoassets in the amount of +948.4 mn USD (week ending Friday) based on Bloomberg data.
Global Bitcoin ETPs managed to attract +894.4 mn USD in net inflows of which +833.1 mn were related to US spot Bitcoin ETFs. Among the spot Bitcoin ETFs, Blackrock's iShares Bitcoin Trust (IBIT) has emerged as the winner after 2 trading days with cumulative flows of +497.7 mn USD based on our calculations with Bloomberg data.
Note that some fund flows data for US major issuers are still lacking in the abovementioned numbers due to T+2 settlement.
Meanwhile, these positive inflows were generally counteracted by significant net outflows from the Grayscale Bitcoin Trust (GBTC). Over the past 2 trading days, Grayscale's fund outflows amounted to -579.1 mn USD. These outflows have accelerated over the past 2 trading days which has negatively affected overall market sentiment.
Apart from Bitcoin, we saw comparatively small flows into other cryptoassets last week.
Ethereum ETPs managed to attract +34.1 mn USD in fund flows, while other altcoin ETPs ex Ethereum managed to attract +5.6 mn USD.
Thematic & basket crypto ETPs also managed to attract net inflows of +14.3 mn USD, based on our calculations.
Besides, the beta of global crypto hedge funds to Bitcoin over the last 20 trading still remains low at approximately 0.8, implying that global crypto hedge funds still remain under-exposed to Bitcoin market risks. It appears as if crypto hedge funds are still waiting on the sidelines for new catalysts.
On-Chain Data
A major focus within the on-chain space was the question of how the newly issued Bitcoin ETFs will affect net exchange flows during the week.
In general, we mostly saw net exchange inflows across crypto exchanges since the ETF approvals and only more recently, on Saturday and Sunday, we saw net exchange outflows across all exchanges. In this context, net exchange outflows generally imply buying interest as coins are sent off exchange into so-called “cold wallets”.
In this context, an important cause for the post-approval sell-off last week was the fact that the amount of coins sent by short-term holders to exchanges accelerated and reached a new all-time high of 5.02 bn USD one day after the trading launch.
Short-term holders are those investors with a holding period of 155 days or less. This has certainly contributed to the recent downside pressure and appears as if short-term investors were indeed “selling the news” of the approval.
On a positive note, long-term holders have not been sending significant amounts of coins to exchanges, which implies that the recent sell-off likely won't be very protracted.
However, a main risk for the market remains continuing outflows from Grayscale's Bitcoin Trust (GBTC) and the associated distribution of coins on exchanges. Over the past 3 days, Grayscale's wallet addresses, have distributed around 4k BTC that have been sent to multiple addresses according to data provided by Arkham Intel. This still falls short of approximately 13k BTC that have flown out of the GBTC ETF over the past 2 days alone.
At the time of writing, GTBC still holds 617k BTC in assets-under-management and is by far the biggest Bitcoin entity globally. This will most certainly be a main focus of the market over the coming weeks.
The market remains generally in a profit-position and even short-term holders' unrealized profits are still relatively high. Besides, realized losses still remain relatively low. In other words, despite the most recent sell-off, the market has not experienced a significant capitulation yet.
Futures, Options & Perpetuals
Recent excesses in BTC futures and perpetual markets are still cleansing out as both basis rates and funding rates are normalizing.
BTC futures open interest has remained fairly constant in BTC-terms during the ETF week, while perpetual open interest mostly declined. In contrast, BTC option open interest has increased considerably during the ETF week, albeit from low levels.
The futures basis rate has continued to decline and is now slightly below 10% p.a. In this context, we briefly saw backwardation in the nearest bitcoin futures contracts last week after the sell-off which tends to be a contrarian buy signal. However, perpetual funding rates still remain firmly positive across various exchanges.
On the option side, we saw a significant increase in BTC 25-delta 1-month skew which implies that option traders have been bidding up downside protections. The skew has almost reached levels that imply one-sided positioning and seller exhaustion which would also be a contrarian buy signal but we are likely not there, yet. One of the reasons is that the BTC put-call open interest ratio remains relatively low and we haven't seen a significant spike in relative put-call volume ratios despite the sell-off.
Bottom Line
- Cryptoasset performances showed large dispersion amid a sell-the-news type of correction in the price of Bitcoin
- Our in-house “Cryptoasset Sentiment Index” has declined and is signalling a slightly bearish sentiment
- Daily fund flows into crypto ETPs reach the highest level ever recorded during the week of the ETF approvals (Chart-of-the-Week).
Appendix
Informations importantes
Communication à caractère promotionnel. Les informations contenues dans le présent Document sont fournies à des fins d’information et de pédagogie. Elles ne constituent ni un conseil en investissement, ni une recommandation personnalisée, ni une sollicitation en vue d’acheter ou de vendre un instrument financier.
Le présent Document (qui peut prendre la forme d’une présentation, d’un communiqué de presse, d’une publication sur les réseaux sociaux, d’un article de blog, d’une communication audiovisuelle ou d’un support similaire – ci-après le « Document ») est émis par Bitwise Europe GmbH (« BEU » ou l’« Émetteur »).
Bitwise Europe GmbH est constituée selon le droit allemand et agit en qualité d’émetteur des produits négociés en bourse (« Exchange Traded Products » ou « ETP ») mentionnés dans le présent Document. Les ETP sont émis sur la base d’un prospectus de base et de conditions définitives, susceptibles d’être complétés. Un prospectus a été publié ou, le cas échéant, sera publié conformément au Règlement (UE) 2017/1129. Les investisseurs peuvent obtenir gratuitement le prospectus de base, les conditions définitives applicables ainsi que tout supplément éventuel sur le site www.bitwiseinvestments.eu/fr
L’approbation d’un prospectus par l’autorité compétente ne constitue ni une approbation ni une recommandation des instruments financiers concernés.
Capital à risque. Les crypto-actifs sont des actifs hautement volatils et présentent un risque élevé. La valeur des investissements dans des crypto-actifs ou dans des ETP liés aux crypto-actifs peut fluctuer fortement à la hausse comme à la baisse et les investisseurs peuvent perdre tout ou partie de leur capital investi.
Les ETP liés aux crypto-actifs sont des instruments financiers complexes et peuvent ne pas convenir à tous les investisseurs. Ils peuvent exposer les investisseurs à des risques spécifiques, notamment un risque de crédit de l’émetteur, un risque de liquidité, des risques opérationnels ainsi que des risques liés au fonctionnement, à la réglementation et à la valorisation des marchés des crypto-actifs sous-jacents.
Aucun mécanisme de garantie du capital ne s’applique. Selon la juridiction et le mode de détention, les investisseurs peuvent ne bénéficier d’aucun mécanisme public d’indemnisation ou de protection des investisseurs.
Les performances passées ne constituent pas un indicateur fiable des performances futures. Toute déclaration prospective reflète des hypothèses et des anticipations et ne constitue pas une garantie de résultats futurs.
Avant toute décision d’investissement, les investisseurs doivent lire attentivement le prospectus de base, les conditions définitives applicables et notamment la section intitulée « Avertissements ». Une décision d’investissement doit tenir compte de la situation personnelle de l’investisseur, de ses objectifs, de son horizon d’investissement et de sa capacité à supporter des pertes potentielles. Le cas échéant, il convient de solliciter un conseil indépendant en matière financière, fiscale et juridique.
Un avertissement détaillé sur les risques applicables aux ETP liés aux crypto-actifs est disponible à l’adresse suivante : www.bitwiseinvestments.eu/fr/risk-warning
