Monthly Crypto Alpha Report – December 2023

December 2023

Crypto’s back, baby.

The moon math memes are back, and news items such as ‘Hong Kong Gaming Company Boyaa wants to Buy $100M in Crypto‘ induce flashbacks to the summer of 2020.

Not that we’re quite there yet in terms of the market cycle – still pre-halving – but the sentiment of anticipation is similar.

Back then it was the hope that lots of companies would follow MicroStrategy’s lead and put BTC on their balance sheet. Currently, it’s Bitcoin ETF fever.


Monthly Crypto Alpha Report - December 2023 - - 2024

In the first week of December, BTC broke out of its ascending triangle, topping out (at the time of writing) just above $44k. Only 4k to go to my price target for 2023 of 48k, lol!

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But seriously. It’s of course quite possible – and it would be healthy – that we see a retracement from here, after 7 green weeks in a row.

Whenever the moon math memes are flooding your X timeline, you know that plenty of smart traders will want to take the counter trade.

To get a reality check, let’s look at inflows and on-chain data. One interesting chart is the market cap of all stablecoins combined. This has bottomed.

USDT’s market cap has reached new all-time highs. This is money waiting on the sidelines.

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And it isn’t just that. VC money is flowing in again. Wormhole just raised a whopping $225 million at a $2.5 billion valuation, to name an example.

Interestingly, November was also the month in which trading volume in CME Bitcoin futures contracts exceeded the Binance BTC futures market. As the CME is an exchange where institutional investors play around, this is another signal that institutional money is paying attention.

Macro news has given us tailwinds. The mid-November inflation data for the US were good (lower than expected).

Stocks pumped; the dollar dropped – just a nice environment for risk assets like crypto.

Gold had a crazy wick, briefly reaching a new all-time high before retracing. And, most fun of all, altcoins are booming. 

But let’s start with BTC. 

Glassnode reports that the divergence between long-term and short-term BTC holders has never been bigger. Long-Term Holder (LTH) supply (blue) has been continuously hitting new all-time highs since November 2022.

Even though more than 80% of BTC is now in profit, these long-term holders are like: ‘We’re not selling’. You can see that in the below Glassnode graph, published on November 20.

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Not only are people not selling, but they’re also accumulating across the board.

This is shown by another graph from the mentioned Glassnode report. Both small and big holders have become net accumulatoooors in recent weeks (blue color).

Michael Saylor? Not selling, buying a few thousand BTC more.

El Salvador? Same.

Your mother-in-law? Stacking sats.

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All this signals a degree of supply tightness not often seen before.

Sure, at some point, long-term holders will start selling.

Traditionally, this has happened only around the time of a new all-time high. At current levels, the cohort of diamond-handed holders apparently hasn’t made enough unrealized profits to sell.

That’s what the on-chain data suggest, at least.

Binance and Bitcoin ETF News

Binance got a staggering $4 billion fine from the American SEC. CEO Changpeng Zao has to step down and risks jail time (probably will get house arrest). Binance will have to leave the US.

While this might all sound bearish to normies, to us it’s not. It was the final hurdle that needed to be taken on the way to a spot Bitcoin ETF. The SEC needed to boot out Binance, the highest-profile crypto exchange in the world, an exchange that it didn’t like and couldn’t control.

Now that Binance has kissed the ring of the SEC, the chances of spot Bitcoin ETF approvals in January 2024 have become even higher. These ETFs will unlock capital from the traditional financial markets, such as pension funds. A dormant risk that hung over the market has largely disappeared with this billion-dollar settlement.

We’ll see if the ETF approval itself will become a ‘sell the news’ event – but it’s hard to see how trillions of potential inflows would in the long run NOT pump the price.

Galaxy Digital did a seemingly rather conservative estimate that 0.1% of US tradfi capital could flow into BTC ETFs in the first 12 months after approval. By their calculation, this would mean a 74% price increase for Bitcoin. In other words, these ETF inflows alone would take us to roughly all-time high levels.

Ethereum

On November 9, BlackRock registered the iShares Ethereum Trust and applied for the corresponding spot Ether ETF.

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Ether had a nice subsequent pump and painted a fine chart of higher highs and higher lows. Still, it has underperformed compared to most investors’ expectations.

But don’t fade ETH! It just has been trapped between the Bitcoin ETF hype on one side and the Solana hype on the other. ETH’s time will come!

Measured against BTC, ETH has been rather flat in the past month. A notable difference between BTC and ETH is that while BTC is back above price levels pre-bear market (pre Luna crash of 2022), ETH still isn’t there yet. A price of roughly $2500 would mean that for ETH.


Monthly Crypto Alpha Report - December 2023 - - 2024
Monthly Crypto Alpha Report - December 2023 - - 2024

Monthly Crypto Alpha Report - December 2023 - - 2024
Monthly Crypto Alpha Report - December 2023 - - 2024

Monthly Crypto Alpha Report - December 2023 - - 2024
Monthly Crypto Alpha Report - December 2023 - - 2024

Monthly Crypto Alpha Report - December 2023 - - 2024
Monthly Crypto Alpha Report - December 2023 - - 2024

Monthly Crypto Alpha Report - December 2023 - - 2024

If history rhymes, we’re in the phase of the market cycle where dips in the coming months are for buying.

Zooming out, realize we’re in the decade of mass adoption for crypto. The coming few years might be the best years for crypto investors.

In fact, this could be the last cycle where truly insane gains can be made. Make sure to stay dialed in!


Monthly Crypto Alpha Report - December 2023 - - 2024

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Monthly Crypto Alpha Report - December 2023 - - 2024

TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.

You can find a full disclosure of all my crypto & venture investments here.

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