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Bitget Newsletter: March 07, 2024

Bitget Newsletter: March 07, 2024

The content below represents the personal views and opinions of the authors. It should not be considered as investment or financial advice.

In what's been a hectic few weeks in the crypto space, we've tried to encapsulate some of the latest stories and narratives to help keep you all up to date. This week we discuss: Spot BTC ETF inflows, Spot Ether ETF delay, EigenLayer’s TVL growth, Bitcoin’s Net Unrealized Profit/Loss (NUPL) and Clearpool ($CPOOL).

Bitcoin ETF Inflows

It's official: Bitcoin has reached new all-time highs. But what's driving this demand? A significant portion appears to be fueled by the growing interest in spot Bitcoin ETFs. As of Feb 28, the nine funds have collectively accumulated over 300,000 BTC since their launch on Jan 11. This amount represents a staggering 1.5% of Bitcoin's total supply. Moreover, this figure is continually increasing, with no signs of slowing down, as records are consistently being broken.

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Spot Bitcoin ETF trading volume has officially surpassed $9.58 billion, with BlackRock leading the charge. In fact, BlackRock continues to surpass its own records for Bitcoin ETF inflows; it was reported that on March 5, BlackRock amassed $788 million in inflows.

The increasing trading volume of these Spot Bitcoin ETFs seems to be having a snowball effect on the wider market. The growing awareness among retail investors about the seriousness with which institutions are treating Bitcoin and cryptocurrencies in general is making them more bullish on the asset class. This sentiment is adding even more buying pressure to the market.

SEC Delays Spot Ether ETF Applications From BlackRock and Fidelity

While we are on the topic of Spot ETFs, it’s worth mentioning that The U.S. Securities and Exchange Commission (SEC) has postponed its decision on the awaiting Spot Ether ETF proposals submitted by BlackRock and Fidelity, the entities responsible for the two largest spot Bitcoin funds. This comes as no surprise; I expect the SEC will delay approval for as long as possible, as they did with the spot BTC ETF. However, I believe the approval of the Spot Ether ETF is inevitable. The approval of the Spot Bitcoin ETF has set a precedent for future cryptocurrency ETF approvals, and both BlackRock and Fidelity are aware of this.

The SEC postponed the applications from both BlackRock and Fidelity as they sought additional information regarding the risks linked to Ethereum's Proof of Stake mechanism. The SEC raised concerns about whether this consensus system might lead to a concentration of control or influence by a few entities, which could potentially raise unique worries about Ether's vulnerability to fraud and manipulation.

Despite these concerns raised by The SEC Eric Balchunas, a senior ETF analyst at Bloomberg, estimated there is a 70% chance the Spot Ether ETF applications are liekly to be approved in May. Of course, only time will tell, but many market participants are speculating on how the approval might influence the price of ETH. Will we witness a surge similar to what Bitcoin experienced?

EigenLayer TVL Continue To Surge

One of the hottest narratives within the DeFi space in 2024 so far is restaking. As of March 5, EigenLayer, a restaking protocol, achieved a record Total Value Locked (TVL) of $11 billion. This surpasses Aave's 21-month high of $10.7 billion TVL, positioning EigenLayer as the second-largest DeFi protocol by TVL, following staking giant Lido.

Despite concerns raised by many about restaking, users remain highly interested in the opportunity to accumulate additional yield. While some Ethereum developers warn that it could introduce excessive leverage, proponents argue that it can provide extra rewards to those who have already staked their ETH. Nevertheless, EigenLayer's TVL continues to rise steadily. Anticipation is high for further growth, especially with the upcoming launch of EigenDA, the first actively validated service (AVS) in the EigenLayer ecosystem, later this year.

For those interested, there are still opportunities for users to earn Eigen points by participating in restaking activities. It's anticipated that Eigen points will be used to distribute EigenLayer's own token, although we are still awaiting confirmation of this..

Bitcoin Net Unrealized Profit/Loss (NUPL)

Once Bitcoin enters the price discovery phase, a key metric to monitor is the Net Unrealized Profit/Loss (NUPL) of both short-term and long-term holders. This is crucial because it provides a good indication of when market participants are likely to take profits.

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As NULP has just reached 0.5, it’s fair to say we are in this phase of the cycle. What was $BTC’s price action doing in these regions?

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Assuming no unforeseen black swan events occur, based on previous cycles, it suggests that this rally is just the beginning. While this information serves primarily as a guide, the current market setup looks very similar to the 2017-2018 cycle, both in terms of price movements and the NUPL for short-term and long-term holders. A key insight we can derive is that both groups of holders seem to be far from the points at which they typically decide to take profits.

Clearpool - $CPOOL

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For those of you who are unaware, Clearpool is a decentralized finance ecosystem that incorporates the first-ever permissionless marketplace for unsecured institutional liquidity. While the project itself isn't new, it recently caught my attention for two reasons. First, it secured a grant of 250,000 MNT tokens from Mantle. Considering their prior grant allocations, it's evident that Mantle is selective when awarding grants. In fact, Mantle explicitly states that it distributes grants to innovative projects that add value to its ecosystem. Given that Mantle's mainnet was launched only in July 2023, their establishment of a relationship with Clearpool as one of the first decentralized money markets in their ecosystem speaks volumes. Another reason why it’s come to my attention is because of the chart of Clearpool’s governance and utility token, $CPOOL. It’s managed to set higher highs on the larger timeframes, volume has also been rising, it seems to be breaking out of a sustained period of accumulation, and it’s 4700% away from ATHs.

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.