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Bitget Newsletter 6

Bitget Newsletter 6

In this week's newsletter, we begin with a retrospective of 2023, examining the growth and development of the cryptocurrency market throughout the year. While it's common to focus on short-term fluctuations in price, a broader perspective, especially through an analysis of on-chain data, reveals the significant strides Bitcoin has made over the year. Additionally, we dive into a compelling narrative that we anticipate will significantly impact the crypto world. Finally, we finish off by discussing the latest developments with the Bitcoin Spot ETF, as a new competitor joins the race!

Bitcoin On-Chain Data

As the year draws to a close, I'd like to draw attention to several key charts that illustrate the significant progress the market has made over the past year. Starting with the chart below, take note of the growth in market capitalization for Bitcoin, Ethereum, and the wider Altcoin sector. It's important to highlight that Bitcoin's market cap experienced a 172% increase at its highest point this year. I firmly believe that this October rally signifies the beginning of an upcoming bullish trend in the market, and I say that with a lot of confidence, as you don’t see these types of numbers during a bear market…

Bitget Newsletter 6 image 0

This statement is also backed by Figure 2.

Bitget Newsletter 6 image 1

October witnessed a notable rise in Bitcoin transaction activities. During this month's rally, the daily transfer volumes of Bitcoin jumped from $2.4 billion to over $5.0 billion, marking the highest level since June 2022. This trend deviates from the usual patterns seen in bear markets, and instead mirrors the type of activity often seen during shifts from bear to bull markets.

RWA Narrative

A theme I've often explored over the year concerns the narrative about Real World Assets (RWA). My excitement continues to be strong for RWA, especially in regards to their tokenization.

To support my argument, I've provided Figure 3 below.

Bitget Newsletter 6 image 2

The forefront of the Real World Asset (RWA) narrative in 2024 will be driven by the tokenization of treasuries. The market is witnessing an influx of stablecoins backed by RWAs. A prime example is USDY. Referring to the chart above, the Total Value Locked (TVL) in tokenized treasuries has increased nearly sixfold in 2023. I anticipate that this upward trend will continue without slowing down in the near future.

This is not investment advise, however, we strongly believe that RWA tokens will flourish throughout 2024. We are yet to see the RWA hype train take off, so I suggest you start researching them. Three of my favourite ones so far are ONDO Finance ($ONDO), Centrifuge ($CFG) and Pendle ($PENDLE).

Bitcoin ETF Update

Although the majority of the market are growing tired of the on-going Spot Bitcoin ETF saga, there has recently been some developments that may suggest a Januarty approval is still on the cards.

The U.S. Securities and Exchange Commission (SEC) has made December 29th as the final date for submitting amendments to applications for spot Bitcoin exchange-traded funds (ETFs). This deadline is crucial for applicants who aim to be included in the initial round of approvals expected in early January 2024.

This decision was made following a meeting on December 21, where SEC officials met with representatives from various firms, including BlackRock, Grayscale Investments, ARK Invest, and 21 Shares. The meeting also involved representatives from potential listing exchanges such as Nasdaq and the Chicago Board Options Exchange, along with lawyers and issuers.

To comply with the SEC's requirements, several applicants have been updating their filings to include a cash redemption model instead of in-kind redemptions. Additionally, the SEC has asked for the naming of authorized participants (AP) in the filings. Bloomberg ETF analyst Eric Balchunas pointed out that having an AP agreement is a significant step towards approval. As of December 22, no applicant had an AP agreement in place, but seven firms had switched to a strictly cash redemption model.

Despite the tight schedule and these requirements, Bloomberg analysts remain optimistic, predicting that the SEC is likely to approve the first spot Bitcoin ETFs by January 10.

Hong Kong Enter Spot ETF Race

Something that may speed up the spot ETF approval in the U.S. is the fact that Hong Kong are now entering the race! Hong Kong is poised to embrace spot crypto ETFs as its financial watchdog, the Securities and Futures Commission (SFC), along with the Hong Kong Monetary Authority, have signaled their readiness to entertain applications for such funds. This move, announced on December 22, marks a significant step in the city's approach to virtual asset-related activities.

A key stipulation from the SFC is that all cryptocurrency transactions by these ETFs must be conducted through platforms or financial institutions licensed by the SFC. The SFC has also permitted both in-kind and in-cash subscriptions and redemptions for these VA ETFs. Additionally, for the custody of these virtual assets, the SFC mandates that the fund's trustee or custodian can only delegate this function to an SFC-licensed VATP or entities meeting the Hong Kong Monetary Authority's crypto custody standards.

This development in Hong Kong stands in contrast to the stricter stance on cryptocurrency activities seen in mainland China. In recent times, Hong Kong has shown a more welcoming attitude towards crypto firms, even facilitating collaborations with banks. Earlier in October 2022, Hong Kong released policy statements on cryptocurrencies to bolster its position as a global financial center, and in June, it initiated a crypto licensing system for virtual asset trading platforms, allowing them to offer retail trading services.

The fact that Hong Kong have now entered the Spot ETF race puts a lot of preasure on the United States. Whoever approves a major spot Bitcoin ETF first will have access to a wealth on institiuional funds. The question is, where will we see the first spot ETF?

This is brought to you by @TheCryptoMann1, @CryptoinsightUK, and @ItsRagnarYT, who have recently partnered with Bitget to help provide the latest cryptocurrency news and technical developments. Be sure to check out their Discord, “ Trading Insight " for more information!
Disclaimer: The views, information, or opinions expressed in the report are intended for informational and educational purposes only. It is not intended or offered to be used as legal, tax, investment, financial, or other advice. Under no circumstances are Bitget, our employees, agents, partners, and/or co-operations responsible for any decision made, action taken, or result obtained from or in reliance on the use of the information herein. Any investment or trading ideas, strategies, or actions should never be taken without first taking into consideration each individual's personal and financial situation and/or without consulting financial professionals.