Opening:
Welcome to the inaugural edition of the Greythorn Market Update. In an era when cryptocurrencies are increasingly in the spotlight, it is vital to ensure our readers have a solid understanding of the latest developments in digital assets and blockchain technology.
At Greythorn, we strive to provide monthly market updates that provide in-depth analysis of the latest developments in the crypto markets and their interaction with the macroeconomic environment.
Each report will include analysis of key market indicators, in-depth interpretation of adoption trends, changing market sentiment, the latest news on regulatory developments, and in-depth exploration of the evolving role of cryptocurrencies in the global economy, helping you stay ahead in this dynamically changing industry.
Bitcoin Analysis:
January marks an important period for Bitcoin, with significant developments and price fluctuations.
A strong start to the year:
Bitcoin had an impressive start to January. On the evening of January 1, the price of Bitcoin began to surge, reaching over $45,800 on January 2. This is a price level that has not been reached since the collapse of the Terra ecosystem in April 2022 and the subsequent market chaos.
Bitcoin celebrates 15th anniversary
On January 3, Bitcoin celebrated the 15th anniversary of its Genesis Block mining, a milestone event that not only commemorates the beginning of the Bitcoin network, but also reviews Bitcoinâs innovation journey and ecosystem development. As the first block, the Genesis Block, also known as Block #0, is self-generated by the Bitcoin protocol. It not only starts the blockchain, but also introduces the first 50 Bitcoins through mining rewards, marking the beginning of Bitcoinâs journey. On this anniversary, the accelerated development of the Bitcoin ecosystem, such as the introduction of Bitcoin-based NFT markets and potential data storage applications, as well as the advancement of Bitcoinâs Layer-2 solutions and the potential to transform Bitcoin into a multi-asset network through Taproot assets, are all worthy of industry attention.
Bitcoin performance overview for January
Despite a strong start to the year, Bitcoinâs performance was relatively volatile throughout January, with prices moving sideways.
On January 8, rumors began to circulate that the U.S. Securities and Exchange Commission (SEC) was about to approve the first U.S. Bitcoin spot ETF, with the market speculating that Blackstone Group had already prepared $2 billion in funds for the new ETF.
However, on January 10, a hack of the SECâs accounts led to false announcements regarding the approval of multiple Bitcoin ETFs.
After some initial confusion, SEC Commissioner Hester Peirce gave the official confirmation on January 11. The market immediately had the expected âsell the newsâ reaction, but prices continued to fluctuate in the sideways range that had formed since early December.
ETF launch and market impact
After these events, Blackstone's IBIT had over $1 billion in volume on its first day, while other ETFs such as Fidelity's FBTC, ARK/21Shares' ARKB, and Bitwise's BITB also performed well. Total volume including GBTC reached $4.3 billion. Even the less prominent WisdomTree's BTCW outperformed most new ETFs.
Contrary to some expectations, the price of Bitcoin did not surge after these developments. This was partly due to the âsell the newsâ pressure mentioned above, and the fact that the outflows from GBTC were not fully reinvested in Bitcoin, either in spot or through ETFs. Many speculators who had previously invested in GBTC may have taken profits, contributing to the subsequent decline in prices.
During this period, Ethereum surpassed Bitcoinâs performance for the first time in a while. This change was mainly due to a rotation of cryptocurrency portfolios from Bitcoin to Ethereum, especially in the context of the upcoming Ethereum ETF.
As the excitement around the ETF subsided, Bitcoin prices initially stagnated and then fell below $39,000, a level not seen since early December. This drop was mainly driven by the exit of GBTC. As investors began redeeming their GBTC holdings, the market observed significant outflows, with the largest single-day outflow recorded on January 22, totaling $640 million.
Despite the challenges, Bitcoin price showed resilience in late January. The outflow rate of GBTC began to decrease, and by the 25th, fund outflows reduced to US$394 million. This slowdown, while still significant, marks the lowest outflows since the ETF launch date, potentially signaling that the market is beginning to stabilize.
Source: BitMEX Research
In conclusion, January is a critical period for Bitcoin, and looking ahead, several important factors may affect the direction of the market. The US government plans to sell a large number of seized Bitcoins, which may bring some selling pressure. At the same time, the SEC has postponed several Ethereum spot ETF proposals, and FTX has sold about $1 billion of GBTC. In addition, there are reports that about 200,000 BTC from the Mt. Gox bankruptcy case is expected to be distributed in the coming months.
However, we should not ignore the rising trend of market interest in Bitcoin, and key market activity indicators show that Bitcoin activity has increased. It is particularly noteworthy that according to historical rules, the Bitcoin halving event expected to arrive in half a year usually marks the start of a new bull market. Combining these factors, it can be seen that the next few months will be full of challenges and exciting opportunities for Bitcoin investors.
Summary of market highlights this month:
The U.S. Securities and Exchange Commission (SEC) has experienced turmoil: This month, the SEC not only encountered an account security incident, but also announced the formal approval of 11 Bitcoin spot ETFs, which attracted widespread attention in the market.
A new chapter in Ethereumâs development: Co-founder Vitalik Buterin unveiled Ethereumâs updated roadmap, focusing on network expansion and further decentralization, demonstrating the Ethereum communityâs continued pursuit of the technological frontier.
Bitcoin retail adoption soars: More than 6,000 retailers worldwide now accept Bitcoin payments, showing significant growth in the use of cryptocurrencies in everyday transactions.
Ark Investments Reduces Coinbase Stake: This month, Ark Investments sold more than $50 million worth of Coinbase shares, reflecting an adjustment in its asset allocation strategy.
Bitcoin futures market hits record high: Chicago Mercantile Exchange (CME) Bitcoin futures trading volume reached an all-time high, highlighting the growing institutional interest in Bitcoin.
Asia's crypto market expands: About ten Hong Kong companies are exploring the launch of spot crypto ETFs, marking an increase in interest in crypto assets in the region.
Fox Corporation and Polygon Labs cooperate: The two parties cooperated to launch the blockchain-based media platform Verify, reflecting the exploration of mainstream enterprises on the application of blockchain technology.
Bitcoin surpasses silver: Among U.S. ETF commodity assets, Bitcoinâs market capitalization has jumped to second place, highlighting its importance as an asset class.
SEC postpones Ethereum ETF decision: Extending Fidelity's Ethereum ETF review period to March has delayed market expectations for the decision.
Trump opposes CBDC: Donald Trump has promised to block the issuance of central bank digital currencies if re-elected as US President.
South Korea reassesses crypto tax policy: It is considering the possibility of a spot Bitcoin ETF, reflecting a rethinking of cryptocurrency tax policy.
Global cryptocurrency users surge: According to Crypto.com, the number of global cryptocurrency users has soared to 580 million.
Tesla maintains Bitcoin holdings unchanged: This was confirmed in its fourth-quarter financial report, demonstrating long-term confidence in Bitcoin.
Polymer Labs has received significant financing: raising $23 million for its Ethereum second-layer network development.
OKX plans to shut down mining pool services: The crypto exchange announced that it will end its mining pool services by the end of February.
Ripple co-founder hacked: Personal XRP account leaked in $113 million hack.
Celsius Network begins paying out $3 billion in compensation after completing Chapter 11 bankruptcy proceedings.
Hong Kong Investigates Worldcoin Data Privacy: Concerns Concern Over How It Collects and Processes Personal Data
Ethereum Dencun upgrade successfully launched: launched on the Sepolia testnet, aiming to reduce fees and improve network scalability.
Solana transaction volume reaches multi-year high: According to The Block data, it reflects the high market activity and interest in Solana
On-chain analysis outlook
Source: Binance Research, Grayscale
Recently, Sui has shown impressive growth momentum, with its total locked value (TVL) and trading volume rising sharply, ranking 12th and 9th in TVL and weekly trading volume respectively. In particular, Sui has successfully attracted $50 million in funds from Ethereum, becoming an important gathering place for liquidity.
Source: Wormhole, DeFiLlama
Disclaimer: The cryptocurrency ecosystem is extensive and continuously evolving, with numerous indicators of daily interest. This analysis focuses only on selected monthly key indicators and is intended to provide a quick overview. It does not purport to be comprehensive in covering all details.
Macroeconomic Analysis
Conclusion
As we head into 2024, itâs clear that this year will be a brighter year for cryptocurrencies compared to the challenges of 2023. Despite some concerns in the broader economic context, the crypto space is entering a new phase of growth. The recent ETF approval is an important milestone, signaling a renewed global recognition of the potential for cryptocurrencies to create a substantial impact.
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