01 March 2024

20%! That's the weekly gain in Bitcoin. We all know about it and are in awe of what Bitcoin can achieve after it’s written off. It briefly crossed $64,000 and rekindled hopes of a new all-time high v/s the Dollar. BTC is consolidating around $61,000 today and we are officially amidst a bull market...

Well, we won't focus much on altcoins today. Yes, they are also increasing - especially the memecoins are going crazy. The focus today is what's happening with Bitcoin and what is ahead.

But before that, here are the top stories and important stats from this week:

Top-3 stories of the week:

1

2

3

The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $2.28 trillion - UP 16.9%

• Bitcoin price - $61,506 - UP 20.5%

• The dollar index (DXY) - 104.1 - UP 0.2%

• Bitcoin Dominance - 54.35% -  UP 2.6%

• Crypto Fear and Greed Index - 80 - the market is in extreme greed

THE HOT TAKE

Bitcoin goes berserk ✨

After several days of treading cautiously, Bitcoin is currently witnessing a strong surge with an unprecedented upside. On Monday, BTC was at $51,000 and by Wednesday, it had crossed $62,000.

The massive surge in market activity wreaked havoc on popular crypto websites, with Coinbase, CoinGecko, Robinhood, and Crypto.com all reporting significant downtime. “Coinbase app is down, we are SO back,” joked Will Clemente, a crypto analyst.

We are SO back!

Let us try to answer the burning question of what’s causing the sudden interest and what the future holds for Bitcoin.

1. Institutions are buying

We have been pretty clear on one thing. BTC spot ETFs are the gateway for institutional money into Bitcoin and right now the institutions are rushing in through the door. ​Bitcoin ETFs have almost reached 50% of the size of the Gold ETFs. On Wednesday, there was a net flow of $520 million into BTC ETFs.

2. Fidelity is recommending a bigger piece of the pie for Bitcoin:

Every fund makes disclosure on the assets that are held in their portfolio and classify these assets into categories such as equity, bonds, and crypto. Yesterday news surfaced that Fidelity ($4.5 trillion AUM) had updated their portfolio allocations for their "Fidelity All-in-One ETFs" product. They offer 4 different ETFs in this product, with crypto allocations ranging from 1% to 3%.

Even Fidelity’s all-in-one conservative fund now has 1% exposure to crypto. Assuming other funds to follow suit, this implies that more institutional demand leading to a supply crunch in coming months.

3. Halving Speculation

The highly anticipated Bitcoin halving is now roughly 50 days away. From a fundamental standpoint, the halving is indeed not a really big event in itself.

However, from a psychological perspective, BTC has seen a remarkable rally after every halving, and this could lead many people to buy Bitcoin prior to halving to front run the event - this is currently happening.

4. ETF issuers are buying up 10x more BTC than miners are producing

BTC is constantly facing a supply crunch. This is a common trend we’ve been seeing since the Bitcoin ETFs launched last month. While miners are producing roughly 900 Bitcoins per day, ETFs are gobbling 10X which is likely to continue.

5. The surge is starting to create a FOMO among retail investors:

The increase in demand for bitcoin has created a reflexive response. The higher the price goes, the more interest there is in the asset. Balaji Srinivasan highlights that Bitcoin has passed all-time highs in 30+ countries, including China and India.

 Now the key question:

Is the price still ripe to buy BTC?

Let's look at the on-chain metrics to analyse if it still makes sense to buy at this juncture.

 MVRV

The MVRV ratio measures the realized value (a proxy for the cost basis of all coins in circulation) against the current market value. It’s one of the critical top and bottom signals.

Looking in the chart, we can see that it has just reached 2.5. This is consistent with the early stage of a bull cycle as we can see from the past few cycles. In 2021, we topped out at 7.6. When the orange line gets close to the red horizontal bar we’ll know that the market is officially going parabolic and the asset is no more viable to buy at that price point.

Bitcoin Dominance

Typically, BTC dominance increases early in cycles and decreases later as the wealth effect sets in and long-term holders rotate into altcoins for more upside.

From the chart, we can notice that the BTC dominance is rising. BTC is once again leading the market and currently has 54% of the total crypto market cap. Once again, this signals the early stage of the cycle.

For reference, in the last cycle we got as high as 70% dominance before “alt season” kicked off.

While hitting those levels seems to be a distant dream, we do expect Bitcoin dominance to strengthen as we near all-time highs.

What does it mean for you, the investor?

Enjoy the ride, and get your portfolios into healthy positives. Do book some of the profits when you think the market is fully heated up. However, we believe that this is indeed the bull run at its early stages. There is euphoria currently but the market still needs an influx of retail investors to do what it did in 2021.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto-asset or VDA investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.