20 November 2023
In recent weeks, bitcoin was far ahead in the battle. Most other currencies lagged behind. But last Thursday, that changed. The price of ether shot up 10 per cent. How so? That, and more, in this Weekly!
This Weekly in brief
The heatmap below shows that the crypto market as a whole performed fine last month. Bitcoin leads, and ether follows not too far behind. But the rest are also largely green.
The green on the chart symbolises a general optimism in the crypto market. It also represents the change from despondency to hope in the market cycle we wrote about in last week's Weekly.
For most assets with green numbers, they did just a little bit worse than bitcoin. As a result, so-called bitcoin dominance, the share of total market value held by bitcoin, rose. But there are exceptions. Solana, for instance, is on a plus of 134 per cent and chainlink recorded 90 per cent gains in a month. However, there is no sign of a full-fledged alt season (yet).
When asked whether a new bull market has arrived, a modest answer is appropriate. In the context of complex systems, such as financial markets, there are no certainties. That is why we often talk about different possibilities and perspectives. Our basic current scenario is that we have entered a new phase in the market cycle.
A pressing question then, of course, is what the coming market cycle will look like. In the neutral scenario, it resembles the previous cycles. Below is the chart of bitcoin over the past 11 years showing three market cycles.
At the bottom is bitcoin's year-on-year price change. In 2015, 2019 and 2022, it was negative (red). In those years, the price was lower than a year earlier. Since June this year, we have been back in positive territory (orange). And since this week, we are back above 100 per cent price appreciation in a year (yellow).
The sensational stretch of the bull market played out each time with a year-on-year rise of more than 250 per cent (green). Previous times, it always took about a year for us to go from the first time yellow to the first time green.
Can this time be different? Obviously, in two ways.
It could go earlier, fiercer and higher than previous times. This scenario needs a catalyst, such as a confluence of the arrival of ETFs, the halving, the US presidential election and geopolitical and monetary conditions.
It could also go later, weaker and lower than previous times. This would require setbacks such as cancelled ETFs and a deep, severe recession. In the most extreme case, the top of this market cycle could even remain below the all-time high of $69,000.
All in all, an optimistic picture emerges. In doing so, we note that the data we rely on is all retrospective. It tells us that the recent price rise is not hot air, and is supported in various ways. It does not tell us that the price will continue to rise. That depends on what new information the market has to digest in the coming time!
On Thursday, the world's largest asset manager filed an application with the regulator for a spot ether ETF. In it, BlackRock reiterates an argument considered decisive in spot bitcoin ETF applications:
“
Given that the Commission has approved ETFs that offer exposure to ETH futures, which themselves are priced based on the underlying spot ETH market, the Sponsor believes that the Commission must also approve ETPs that offer exposure to spot ETH, like the Trust.''
The price of ether reacted immediately to the news. With a rise of a good 10 per cent, the price broke the $2,100 mark, making up for all the losses against bitcoin in the previous four weeks. Some of those gains have been handed back to the currency; currently ether is going from hand to hand for around $2,000.
There is little point in guessing the outcome of this application at this point. First, the SEC will rule on the fate of bitcoin ETFs. Bloomberg's ETF watchers still give the odds of approval 90 per cent. In endorsing that assessment, James Seyffart reported something striking on Wednesday.
Most analysts assume that the SEC will pass judgment on all pending applications at once. This will prevent the regulator from giving preferential treatment to specific funds. Seyffart wrote that an eight-day period begins on 9 November during which the SEC can make a decision on all applications now hoping for approval. In other words, áf the SEC wants early approval of all funds at once, it should happen this week.
We will keep a close eye on it!
Other news:
Dutch-language podcast Satoshi Radio provides a weekly thoughtful overview of what is going on in the crypto world. This week's topics include the rise of stablecoins, the potential relaunch of FTX, a lawsuit against Barry Silbert, the fate of Sam Bankman-Fried and how the world's biggest bitcoinminer is improving the climate. On YouTube, you can easily click through the different topics:
Optimism in the crypto market is evident at Amdax. We are seeing an increase in trading activity and interest as price increases become evident. Price movements are not only observable with the naked eye, our algorithms also identify strong positive price trends in bitcoin and many altcoins.
The chart below shows the consequence of the upward market movement for our algorithmic strategy Amdax Trend. With Amdax Trend, you automatically invest in a selection of altcoins from the top 20, ranked by market value.
Amdax Trend invests on the principle that price trends persist for longer periods in financial markets. As a result, with this strategy you profit from rising prices, and positions are automatically sold when prices fall.
Learn more about Amdax Trend here:
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