Crypto, Distilled #50
Market Overview, Key Trends, Weekly Insight
Welcome to the 50th edition of "Crypto, Distilled," your 5-minute biweekly edge in the crypto market.
Please note that the content is for informational purposes only and should not be considered financial advice. For full details, see the disclaimer.
Market Overview:
Bitcoin and Ethereum saw a stagnant week. In contrast, Solana surged, gaining over 30%, while Avalanche also performed strongly, rising 17%.
Crypto Market Cap Excluding Bitcoin & Ethereum:
The chart below shows the total crypto market cap minus BTC and ETH, reflecting altcoin performance.
It highlights a recent breakout from an 18-month range, propelled by a surge in retail interest and positive sentiment linked to Bitcoin and expected ETF developments.
Upcoming inflows into Bitcoin and major cryptos may spur an altcoin season, extending further beyond the recently ended 18-month range.
News Highlights:
Bitcoin ETF Issuers Push 3 Crypto Ads In 48 hours
In a span of 48 hours, three Bitcoin ETF ads were launched this week, marking an intensifying marketing battle among asset managers.
Bitwise aired the first ad on December 18, featuring Jonathan Goldsmith, famous as the "Most Interesting Man in the World," in a campaign reminiscent of his Dos Equis beer ads.
Shortly after, on December 20, Hashdex released a commercial contrasting cryptocurrencies with traditional assets, emphasizing their unique nature. The same day, Bitwise countered with another ad, again starring Goldsmith, delivering a message with his iconic persona.
This flurry of promotions by Bitwise and Hashdex underscores a significant confidence in Bitcoin ETFs, despite pending regulatory approval.
Solana (SOL) Overtakes Ripple (XRP) In Market Cap:
This week, Solana's SOL surpassed Ripple's XRP, reclaiming its position as the fifth-largest cryptocurrency by market capitalization.
SOL's remarkable performance in 2023, with a 900% increase, starkly contrasts with XRP's modest sub-100% gain, aligning more closely with Ethereum's 85% and Bitcoin's 160% YTD growth.
Argentina's Minister of Foreign Affairs Affirms Bitcoin Acceptance For Contract Agreements
Argentina's Foreign Affairs Minister, Diana Mondino, announced a significant policy shift, confirming the acceptance of Bitcoin in contract agreements.
This move highlights Argentina's progressive stance on integrating Bitcoin into its legal and financial systems, marking a key moment in BTC's recognition in the country.
Key Market Trends:
Bitcoin Price vs. ‘Crypto’ Search Volume:
Despite Bitcoin's recent rise, the significantly lower search volume for 'crypto' compared to 2021 indicates a lack of widespread frenzy, suggesting the market hasn't reached the heights of previous mania.
Investors, wary entering 2024, may exhibit 'bear market PTSD,' leading them to anticipate early market tops — a typical reaction in early bull markets after enduring prolonged downturns.
Rising USD Liquidity & Bitcoin's Performance:
Despite central banks' tightening measures over the past 18 months, there's still substantial liquidity in the market. As Tedtalksmacro suggests, an increase in liquidity typically leads to gains in both stocks and cryptocurrencies, a trend that has been evident in recent months.
Altcoin Upside Potential Amid Negative Liquidity Delta:
While Bitcoin has recently rallied, Tedtalksmacro highlights a crucial detail: the year-on-year Crypto USD Liquidity delta is still negative. This presents an intriguing scenario for altcoins, as a shift to positive liquidity could significantly boost their performance.
Crypto Equities' Strong Performance:
In 2023, despite various macroeconomic headwinds, crypto equities significantly outshone other asset classes. This performance indicates a promising future for growth and maturity in the digital assets sector.
Source - Coin Metrics
Solana Challenging Ethereum In Mind Share:
Solana (SOL) has shown exceptional price performance, nearly outperforming Ethereum (ETH) by 10x YTD. Notably, the gap in public interest, as indicated by Google Search Trends, is rapidly narrowing.
Sources - Google Trends, TradingView
As SOL's trend line approaches ETH's, it not only signifies a potential shift in market perception but also raises the question of whether Solana can sustain its strong momentum or if its valuation will soon reach a peak tied to the closure of the Google search gap.
Weekly Insights:
Critical Crypto Truths:
Drawing from personal experiences and lessons, these are essential truths I've come to recognize in the world of crypto:
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My Crypto Portfolio:
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