Opening bell │ #32 │ 22nd October

Report highlights:

1. On-chain metrics are possibly indicating that markets have run a little hot as Bitcoin tried to head towards the $70k mark. A short-term top is the more likely scenario for now despite upbeat ETF inflows.
2. Not all stablecoins are equal, and some not stablecoins at all. More importantly, what has seen growth are tokenized short-term treasuries that are now being deployed as capital across protocols and centralized exchanges. Big win for capital efficiency and what blockchain technology can do.

Bitcoin  percent of addresses in profit

Bitcoin faces pressures as on-chain metrics signal a short-term price top.

While there are no silver bullets, Bitcoin on-chain movement can provide insight into how many addresses are in profit based on the price at which Bitcoin was moved and the current price. Patterns emerge, and it becomes evident that when large swings occur—where addresses move from around 75% in profit to 98% in profit (the current ratio)—markets start to experience sell pressures as investors sit on unrealized gains. This may signal a short-term top for Bitcoin ahead of the US elections.

US tokenized treasuries 

Short-term tokenized treasuries planting capital efficiency gains for investors.

The largest growth seen in the past month in real-world asset games, primarily related to tokenized treasuries, is the management of tokens with short-term treasury yields. Recent integrations have pushed this use case further, such as Ethena’s basis trade token, which has opted to diversify across multiple issues for its Reserve Fund treasury. However, it’s not the only player taking advantage of idle cash. Deribit has also begun allowing the use of Hashnote USYC as collateral, earning its traders interest on open positions. Not bad for capital efficiency.

ETF 

ETF Launch enthusiasm still missing from Bitcoin markets.

In the past seven trading days of this month, Bitcoin ETFs have seen positive inflows exceeding $2.6 billion. There was minimal selling pressure, and even Grayscale saw inflows into its more expensive fund. Certainly, markets reacted to these inflows, and prices broke past the $69k mark for the first time since July. Yet, something seems amiss in terms of growth. At the start of the year, there was a large cluster of daily growth in ETFs, which has been absent from the markets lately.

Daily % change in ETF holdings (BTC terms)

Derivatives

Improving basis trade, but still not out of the woods.

Crypto markets are relatively quiet, although some trades are gaining traction. The 3-month rolling basis trade is just under 10%, its highest level since the summer. However, this is still far from the returns that were achievable earlier this year, reinforcing the notion that markets remain soft and lack the enthusiasm to push into new all-time-high territory. Nevertheless, short-term trades remain attractive enough that volumes have stayed elevated so far this month.

3-months annualized rolling basis %

Bitcoin vs gold 

Bitcoin trails behind gold performance relative to historical ETF flows.

It took gold over four and a half years to reach the Assets under Management (AuM) globally that Bitcoin achieved in the US in under a year. But time has a way of spreading assets across different situations that can impact price. For example, gold saw a 75% increase when it hit $21 billion in net flows. In comparison, Bitcoin has returned only 45% so far. Have markets mispriced the volume of flows into Bitcoin? Then again, gold later saw tens of billions in inflows with only small gains. Nothing is certain, but data can serve some direction.

Starting point: gold ETF holdings until it reach $21bn (current net BTC flows)

Economic calendar

Key events this week: 20-year bond auction, initial jobless claims and Michigan prints.

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