Monday, February 19, 2024

On Our "Virtual Route 66" This Week

It was a very insightful week on the tech scene as we present a snapshot of the week that was courtesy of the team at CoinBase, the Institute for Economics and Peace, Fortune On Telegram, and Peter Diamandis' Thoughts on AI, along with a powerplay by China on the Electric Vehicle Front:

Bitcoin is off to a hot start in 2024, revisiting $50K for the first time since 2021. [Sean Gladwell via Getty Images]

What’s up? It’s Coinbase Bytes

There’s never a dull moment on the blockchain. Here’s what you need to know this week:

  • Bitcoin rallied past $50K. The cryptocurrency is revisiting levels last seen in 2021.
  • How blockchains can build a better internet. A closer look at a16z crypto founder Chris Dixon’s new book, “Read Write Own.”
  • This week in numbers. The money blockchains could have saved Americans in 2022, the floor price of Pudgy Penguins NFTs, and other key stats to know.

Price changes are for the past week, ending on Feb 14, 2024 at 10:13 PM UTC

MARKET UPDATE

Bitcoin roars back above $50,000 as investors flock to ETFs

For the first time in two years, bitcoin broke the $50,000 mark on Monday as it recovered from last month’s dip, which came as some traders sold after the new spot BTC exchange-traded funds (ETFs) launched on January 11. 

Since the ETFs launched, a flood of capital has flowed into the new investment class, helping drive crypto prices up. And even as worse-than-expected inflation numbers briefly cooled markets on Tuesday, BTC quickly bounced back on Wednesday to cross $51,000. With bitcoin's total market cap back above $1 trillion, all eyes are on crypto's next moves.

Here’s what you need to know. 

Bitcoin’s post-ETF selloff appears to be over. 

On Monday, the leading cryptocurrency by market capitalization hit its highest price since December 2021 — and is up roughly 30% in the three weeks since it fell below $39,000 on January 23.

The selloff that followed the start of spot BTC ETFs trading in the U.S. appears to be over, and investors both big and small have been heavily accumulating bitcoin ever since.

The BTC ETFs are a historic hit.

In their first month of trading, the two leading spot BTC ETFs — from BlackRock and Fidelity — have had the biggest ETF debuts in history by far. Out of more than 5,500 ETF launches in the last 30 years, they’re the only ones to surpass $3 billion in assets under management within their first month, according to Bloomberg analyst Eric Balchunas. 

As a category, spot BTC ETFs have now purchased a collective 200,000 BTC, worth nearly $9.5 billion. Last week saw $1.1 billion of new inflows to the spot BTC ETFs, marking their biggest week yet.

Ethereum is gaining momentum ahead of a looming ETF decision.

ETH has also rallied in recent weeks, with the token up more than 20% since January lows and breaking past the $2,700 price level on Wednesday for the first time since May 2022.

In the same way that hopes of spot BTC ETF approval buoyed bitcoin’s price action for much of 2023, rumors of an ETH ETF could boost Ethereum in the first half of 2024.

Franklin Templeton, the finance giant with more than $1 trillion in assets under management, just filed an application for a spot ETH ETF with the SEC, which is already reviewing applications from firms like BlackRock, Ark Invest, and Invesco. The agency is obligated to make a final decision on the first wave of applications by May 23. 

Ethereum is also seeing rising onchain activity, with the seven-day moving average of daily transaction volume up 15% since the start of this month, to $3.58 billion. Trade volume of NFTs on the Ethereum blockchain has also hit the highest point in almost a year.

Altcoins could be poised for a breakout.

Typically, when BTC and ETH go up, altcoins tend to follow. And the altcoin rally appears to be right on schedule. 

As of Wednesday, TOTAL3 (an index which represents the market cap of all cryptocurrencies other than stablecoins, BTC, and ETH) was up nearly 10% for the week and up 18% since its January low.

Solana (SOL) and Chainlink (LINK) have helped boost the altcoin market, with SOL up 20% and LINK up nearly 10% in the past week.

How does the current altcoin market compare to its 2021 peak? TOTAL3 currently sits at around $520 billion, compared to more than $1 trillion in November 2021. 

The bottom line… 

As crypto markets rally in the early months of 2024, several narratives could continue to bolster BTC throughout the year. Industry watchers expect wealth managers to start allocating more funds into the new ETFs; Bitcoin’s next halving is currently set for April; and innovations like Bitcoin Ordinals are boosting onchain activity.

As Grayscale analyst Michael Zhao put it this week, “While [BTC] has long been heralded as digital gold, recent developments suggest that bitcoin is evolving into something even more significant.”