- Last week, Bitcoin continued to reach new all-time highs, while the outperformance in altcoins reversed strongly on the back of more evidence for increasing sovereign adoption of Bitcoin as a strategic reserve asset.
- Our in-house “Cryptoasset Sentiment Index” has recently declined but continues to signal a moderately bullish sentiment.
- Based on the latest public information available, the US still remains the largest sovereign holder of bitcoin with around 198k BTC on the government’s balance sheet, closely followed by China.
Chart of the Week
Performance
Last week, Bitcoin continued to reach new all-time highs, while the outperformance in altcoins reversed strongly on the back of more evidence for increasing sovereign adoption of Bitcoin as a strategic reserve asset.
For instance, multiple sources have confirmed that Trump is looking into utilising an executive order to speed up the establishment of the Strategic Bitcoin Reserve via the Treasury's Exchange Stabilization Fund.
Based on the latest public information available, the US still remains the largest sovereign holder of bitcoin with around 198k BTC on the government's balance sheet, closely followed by China (Chart-of-the-Week).
In a recent article, Trump confirmed that the US wants to be ahead of other nations like China in implementing a strategic Bitcoin reserve, essentially confirming that the geopolitical game theory with respect to sovereign bitcoin adoption is indeed in play.
A recent leak had previously revealed that Russia is actively looking into ways to establish a strategic Bitcoin reserve as well. The probability that Trump will create a Bitcoin reserve in the first 100 days of office has recently increased to 35% again based on data provided by Polymarket.
Other countries in Asia are also exploring the possibility of BTC as a strategic reserve asset.
For instance, Japanese lawmaker Satoshi Hamada proposed that the government set up a national bitcoin reserve and convert part of its foreign exchange reserves into bitcoin.
Thailand also plans to use Bitcoin as a reserve to back digital currency. The first sandbox will be Phuket Province.
As a result, Bitcoin reached a new all-time high of 106,554 USD on Coinbase early Monday morning.
We generally expect the number of countries holding bitcoin to double in 2025 as outlined in our latest 2025 outlook report.
We have recently published our top 10 predictions for 2025. Read the full report here.
Apart from the prospects of increasing sovereign adoption of Bitcoin, we continue to see an increasing adoption of bitcoin by corporations, especially in the US. One of the major catalysts is the upgrade to FASB accounting standards, which will facilitate the adoption of BTC as a treasury reserve asset by corporations. These new accounting standards have become effective with the 15 th of December 2024.
At the time of writing, 80 publicly listed companies hold bitcoin on their balance sheet based on data provided by bitcointreasuries.net.
In this context, another major milestone has been the recent inclusion of the biggest corporate bitcoin holder Microstrategy (MSTR) into the NASDAQ 100 equity index which will take effect before market open on the 23 rd of December.
This will likely entail significant capital inflows into MSTR's stock as passive ETFs and funds that track the NASDAQ 100 will need to allocate to MSTR as well. A recent tweet by Michael Saylor implies that MSTR has probably increased its BTC holdings even further.
On the macro front, recent leading indicator data prints in the US were relatively encouraging, with the NFIB small business optimism index spiking to the highest level in 3.5 years. This is following an increase in regional Fed manufacturing expectations and other leading indicators, which point towards the fact that Trump's election victory is already reviving “animal spirits” within the US economy.
However, the Fed is still expected to cut rates this week as recent employment indicators still remained somewhat mixed. At the time of writing, Fed Funds Futures imply a 93% chance for a 25 bps rate cut in December.
In general, among the top 10 crypto assets, Chainlink, Bitcoin, and Ethereum were the relative outperformers.
Overall altcoin outperformance vis-à-vis Bitcoin has reversed significantly last week, with only around 10% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. Ethereum also underperformed Bitcoin significantly last week.
Sentiment
Our in-house “Cryptoasset Sentiment Index” has recently declined but continues to signal a moderately bullish sentiment.
At the moment, 8 out of 15 indicators are above their short-term trend.
We continue to observe high sentiment readings in indicators like the crypto dispersion index or the 3-months bitcoin futures basis.
The Crypto Fear & Greed Index continues to signal an “Extreme Greed” level of sentiment as of this morning.
/bitwise-core-bitcoin-etp/Performance dispersion among cryptoassets has declined somewhat but remains near the highest readings since March 2024. This signals that altcoins have become less correlated with the performance of Bitcoin.
Altcoin outperformance vis-à-vis Bitcoin has reversed sharply last week, with only around 10% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. Ethereum has also underperformed 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 underperformance continues to signal a negative risk appetite at the moment.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has reversed higher last week. The index currently signals a moderately positive cross asset risk appetite.
Fund Flows
Weekly fund flows into global crypto ETPs have continued to be strong last week.
Global crypto ETPs saw around +3,411.8 mn USD in weekly net inflows across all types of cryptoassets which is only a slight deceleration compared to prior week's record of +4,080.3 mn USD in weekly net inflows.
Global Bitcoin ETPs that saw net inflows totalling +2,079.8 mn USD last week, of which +2,157.1 mn USD in net inflows were related to US spot Bitcoin ETFs alone.
The Bitwise Bitcoin ETF (BITB) in the US also saw net inflows, totalling +67.8 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) saw minor net outflows equivalent to -5.3 mn USD, while the Bitwise Core Bitcoin ETP (BTC1) saw minor net inflows of around +0.1 mn USD.
Outflows from the Grayscale Bitcoin Trust (GBTC) continued to be high, with around -221.3 mn USD in net outflows last week. The iShares Bitcoin Trust (IBIT) continued to see positive net inflows of +1,514.3 mn USD last week.
Meanwhile, flows into global Ethereum ETPs decelerated only slightly with around +1,133.5 mn USD in net inflows, after +1,221.6 mn USD in net inflows the week before.
US Ethereum spot ETFs continued to attract significant amounts of capital with around +854.8 mn USD in net inflows on aggregate. The Grayscale Ethereum Trust (ETHE) continued to experience net outflows of around -49.2 mn USD last week.
The Bitwise Ethereum ETF (ETHW) in the US saw minor net outflows of around -4.7 mn USD last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) experienced ongoing net inflows of +4.3 mn USD while the Bitwise Ethereum Staking ETP (ET32) also continued to attract capital with +1.7 mn USD in net inflows.
Altcoin ETPs ex Ethereum also continued to see positive net inflows with around +182.2 mn USD last week. The Bitwise Physical Solana ETP (ESOL) managed to attract +0.1 mn USD last week.
Flows into thematic & basket crypto ETPs reversed after several weeks of net outflows with around +16.2 mn USD in net inflows on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) also attracted some capital (+0.5 mn USD).
In contrast, global crypto hedge funds continued to exhibit a low market exposure to Bitcoin last week. The 20-days rolling beta of global crypto hedge funds' performance to Bitcoin increased only slightly to around 0.63 per yesterday's close.
On-Chain Data
In general, Bitcoin on-chain metrics have been somewhat mixed last week despite new all-time highs.
Selling pressure continued to be high as weekly net selling volumes on BTC spot exchanges amounted to -1,133 mn USD last week.
On the bright side, profit-taking by both long-term and short-term bitcoin holders has gradually declined over the past week which has eased the pressure on the market.
In general, the overall supply deficit in Bitcoin has continued to intensify as evidenced by the continued decline in overall BTC exchange balances. Only 2.8 mn BTC remain on exchanges according to the latest data provided by Glassnode.
Whale activity on exchanges has also turned positive again as whales send bitcoins off exchanges on a net basis. More specifically, BTC whales have sent -20,992 BTC off exchanges last week, signalling increasing buying interest from whales. Whales are defined as network entities that control at least 1,000 BTC.
Futures, Options & Perpetuals
Last week, BTC futures open interest increased strongly in BTC-terms and increased by around +25k BTC. BTC perpetual futures open interest also increased by around +14k BTC.
Futures liquidations remained relatively calm last week and only recently short liquidations have increased to the highest level since early December as BTC crossed new all-time highs this morning.
Meanwhile, BTC perpetual funding rates continued to positive bit not overly excessive signalling ongoing moderately bullish sentiment among BTC perpetual traders.
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 now.
The BTC 3-months annualised basis also continued to remain high at around 16.1% p.a. averaged across various futures exchanges.
BTC option open interest also increased somewhat by around +16k BTC. The put-call open interest ratio remained relatively flat.
However, the 1-month 25-delta skew for BTC increased slightly, signalling a slight relative increase in interest for put options and less bullish sentiment. At the time of writing, the 1-month skew is still more biased towards call options, with a premium of around 4.0% p.a. for delta-equivalent calls.
BTC option implied volatilities also remained relatively stable as 1-month realized volatility declined.
At the time of writing, implied volatilities of 1-month ATM Bitcoin options are currently at around 57.6% p.a.
Bottom Line
- Last week, Bitcoin continued to reach new all-time highs, while the outperformance in altcoins reversed strongly on the back of more evidence for increasing sovereign adoption of Bitcoin as a strategic reserve asset.
- Our in-house “Cryptoasset Sentiment Index” has recently declined but continues to signal a moderately bullish sentiment.
- Based on the latest public information available, the US still remains the largest sovereign holder of bitcoin with around 198k BTC on the government’s balance sheet, closely followed by China.
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