- Last week, cryptoassets outperformed traditional assets by a very wide margin as global weekly cryptoasset ETP net inflows reached their highest level since May 2024.
- Our in-house “Cryptoasset Sentiment Index” currently signals a bullish sentiment again. It just reached the highest level since March 2024.
- Overall, on-chain demand for bitcoins reached the highest level since April 2024 which is evident in the steep rise in apparent demand. Apparent demand tries to estimate demand based on changes in on-chain supply and inventories.
Chart of the Week
Performance
Last week, cryptoassets outperformed traditional assets by a very wide margin as demand, for bitcoins picked up the most since April 2024. This is evident in the steep rise in apparent demand which tries to estimate demand based on changes in supply and inventories (Chart-of-the-Week).
The rise in demand was also clearly visible in the acceleration of net inflows into global crypto ETPs and US spot Bitcoin ETFs, in particular. Last week, weekly net inflows into global crypto ETPs increased to the highest level since May 2024, with US spot Bitcoin ETFs attracting more than 2.1 bn USD in assets. US spot Ethereum ETF inflows also accelerated.
The catalysts behind this move are manifold:
First, Trump's odds of winning the presidential election have recently increased significantly which tends to be net positive for cryptoasset prices as demonstrated in our latest Crypto Market Espresso. At the time of writing, betting odds across various sites imply an average chance of winning of 58.3% for Trump and 41.1% for Harris, respectively.
Second, there has been a general increase in cross asset risk appetite, which is evident in the fact that both the US stock market as well as the price of gold hit a new all-time high last week. This excitement seems to have spilled over into cryptoassets as well. In fact, our in-house Cryptoasset Sentiment Index has increased to the highest level since March 2024 again signalling increasing excitement within the crypto markets.
Third, US fiscal deficits have accelerated recently, sparking concerns over the sustainability of fiscal debts. More specifically, US total outstanding public debt has increased by almost half a trillion dollars since the beginning of September 2024. In this context, bitcoin is increasingly regarded as an alternative reserve asset to US Treasuries, which could contributed to the latest rise in the price of Bitcoin and other cryptoassets.
We continue to expect that the combination of bitcoin's increasing supply scarcity, the global monetary policy pivot, combined with a positive performance seasonality in Q4 will provide a significant tailwind for Bitcoin and cryptoassets over the coming months.
In general, among the top 10 crypto assets, Dogecoin, Solana, and Ethereum were the relative outperformers.
Nonetheless, overall altcoin outperformance vis-à-vis Bitcoin was relatively low compared to last week, with only around 15% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. However, Ethereum outperformed Bitcoin last week.
Sentiment
Our in-house “Cryptoasset Sentiment Index” currently signals a bullish sentiment again. It just reached the highest level since March 2024.
At the moment, 13 out of 15 indicators are above their short-term trend.
Last week, there were significant increases to the upside in the BTC 25-delta option skew and the Crypto Fear & Greed Index.
The Crypto Fear & Greed Index currently signals a “Greed” level of sentiment as of this morning.
Performance dispersion among cryptoassets hovered sideways last week but continues to stay near 3-months highs. This signals that altcoins continue to be less correlated with the performance of Bitcoin.
Altcoin outperformance vis-à-vis Bitcoin was relatively low compared to last week, with only around 15% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. However, Ethereum outperformed Bitcoin last week.
In general, increasing (decreasing) altcoin outperformance tends to be a sign of increasing (decreasing) risk appetite within cryptoasset markets and the latest altcoin outperformance still signals a decrease in risk appetite at the moment.
Meanwhile, sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) continued to increase last week. The index is currently signalling a slightly bullish cross asset risk appetite.
Fund Flows
Fund flows into global crypto ETPs have recently accelerated and reached the highest level since May 2024.
Global crypto ETPs saw around +2,079.6 mn USD in net inflows across all types of cryptoassets which is a significant acceleration compared to prior week's +399.3 mn USD in net inflows.
Global Bitcoin ETPs saw net inflows totalling +2,086.5 mn USD last week, of which +2,131.6 mn USD in net inflows were related to US spot Bitcoin ETFs alone.
The Bitwise Bitcoin ETF (BITB) in the US saw a sharp acceleration in net inflows, totalling +149.8 mn USD last week.
In Europe, the ETC Group Physical Bitcoin ETP (BTCE) continued to see minor net outflows equivalent to -6.2 mn USD, while the ETC Group Core Bitcoin ETP (BTC1) experienced slightly positive net inflows (+0.2 mn USD).
Outflows from the Grayscale Bitcoin Trust (GBTC) recently reversed, with around +91.5 mn USD in net inflows last week. The iShares Bitcoin Trust (IBIT) also saw a massive pick-up in inflows of +1,141.2 mn USD.
Meanwhile, flows into global Ethereum ETPs turned positive last week with around +14.9 mn USD in net inflows, after -1.7 mn USD in net outflows the week before.
US Ethereum spot ETFs saw around +78.9 mn USD in net inflows in aggregate. The Grayscale Ethereum Trust (ETHE) continued to see net outflows of around -31.0 mn USD last week. However, these net outflows were more than offset by positive net inflows into other products.
The Bitwise Ethereum ETF (ETHW) in the US attracted around +3.4 mn USD in assets last week.
In Europe, the ETC Group Physical Ethereum ETP (ZETH) saw net inflows of around +1.0 mn USD while flows into the ETC Group Ethereum Staking ETP (ET32) accelerated significantly with around +10.5 mn USD in net inflows.
Altcoin ETPs ex Ethereum also saw minor net inflows with around +4.3 mn USD last week.
Interestingly, Thematic & basket crypto ETPs were the only ETPs that experienced net outflows of around -26.1 mn USD on aggregate last week. The ETC Group MSCI Digital Assets Select 20 ETP (DA20) also experienced minor net outflows last week (- 1.7 mn USD).
Meanwhile, global crypto hedge funds maintained their exposure to Bitcoin last week. The 20-days rolling beta of global crypto hedge funds' performance to Bitcoin was unchanged at around 0.81 per yesterday's close.
On-Chain Data
In general, Bitcoin on-chain metrics continued to improve more recently.
This is most evident in bitcoin's apparent demand over the past 30 days which has increased to the highest level since April 2024 (Chart-of-the-Week). The metric tries to estimate underlying demand via changes in mined supply and inventories proxied by the change in supply last active since more than 1 year. Based on this metric, bitcoin demand has increased by slightly more than 200k BTC over the past 30 days.
This is also showing up in the change in realized cap which is a good proxy for on-chain capital invested. The change in realized cap for Bitcoin implies that approximately +20.1 bn USD have been invested into bitcoin over the past 30 days – the highest level since June 2024.
This measure has also picked up for Ethereum albeit from a low level with around +339.4 mn USD in on-chain capital invested over the past 30 days.
However, Bitcoin spot intraday net buying volumes on exchanges have not yet accelerated meaningfully although they continued to be slightly positive over the past 7 days with around +115 mn USD in net buying volumes across all BTC spot exchanges. This implies that there is some distribution in the background.
In fact, we are observing an increasing share of older coins coming onto the market again based on the decline in supply that has been last active more than 1 year ago. That being said, this is usually a sign of an ongoing bull market where longer-term holders start to distribute their older coins with higher prices.
On a positive note, Bitcoin whales also continued to be net accumulators of bitcoin with around -7,380 BTC net transfers off exchanges last week. Whales are defined as network entities that control at least 1,000 BTC. Overall BTC on-exchange balances have continued to drift downwards again according to Glassnode data.
Futures, Options & Perpetuals
Last week, there was significant pick-up in BTC futures and perpetuals open interest.
More specifically, BTC futures open interest increased by around +32k BTC while perpetual open interest increased by +10k BTC. Futures open interest reached a new all-time high in USD terms but remains below its all-time highs reached in October 2022 in BTC-terms.
Meanwhile, BTC perpetual funding rates remained very positive throughout the week. Perpetual funding rates reached the highest level since June 2024 on Sunday.
When the funding rate is positive (negative), long (short) positions periodically pay short (long) positions. A positive funding rate tends to be a sign of bullish sentiment in perpetual futures markets.
The BTC 3-months annualised basis also continued to increase and is currently at around 9.6% p.a.
Besides, BTC option open interest also increased significantly last week by around +27k BTC. Meanwhile, the put-call open interest ratio also increased, which implies that there was a net increase in put positioning.
However, the 1-month 25-delta skews for BTC continued to drift sharply lower last week, signalling an increase in the relative demand for call options. The 1-month skew is now significantly more biased towards call options.
BTC option implied volatilities moved slightly higher, probably due to increasing hedging activity before the 5th of November election event because 1-month realized volatility drifted lower. At the time of writing, implied volatilities of 1-month ATM Bitcoin options are currently at around 56.6% p.a.
Bottom Line
- Last week, cryptoassets outperformed traditional assets by a very wide margin as global weekly cryptoasset ETP net inflows reached their highest level since May 2024.
- Our in-house “Cryptoasset Sentiment Index” currently signals a bullish sentiment again. It just reached the highest level since March 2024.
- Overall, on-chain demand for bitcoins reached the highest level since April 2024 which is evident in the steep rise in apparent demand. Apparent demand tries to estimate demand based on changes in on-chain supply and inventories.
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