Efficient Frontier January 2024
Palate cleanser
The Bitcoin ETF era has begun. It may have been a short term ‘sell the news’ event, but certainly leaves us feeling bullish on the prospect of institutionalizing digital assets in 2024.
The entire market rallied in the 3 months leading up to the approval, with many tokens increasing hundreds of percent. Now with the unlocking of Grayscale, allowing billions worth of formerly ‘trapped’ Bitcoins to be sold, and 90 more days to halving, all eyes continue to be on Bitcoin.
Note from our CEO
The last period of growth benefited us in four ways: It increased our trading volumes, expanded the value of many of our clients’ tokens, brought us several new exchange deals and created more robust token launches.
As a liquidity provider we were very satisfied with the recent launches we facilitated. Volatility was relatively mild and the tokens quickly found support. This is a great sign for things to come.
Happy new year,
Yohai Rayfeld
Chart of the month
The image above is a crypto futures ‘heatmap’ from CoinGlass, showing the excitement and market over-heat leading to the Bitcoin ETFs announcement and the following cool down. The chart marks in colors the last 6 months of premiums paid to speculate on cryptocurrencies. The bright yellow shows the period between December 27th and January 2nd when speculators paid over 50% annualized interest to bet on price increases. Currently premiums are back below 10%.
Blogs and feeds
Gaming is one of the hottest narratives in crypto, so this month we shared on the EF blog a deep dive on the subject. The article overviews in-game economies, taxation of creators and how The Sandbox stands to change it all.
Team update
We're happy to welcome Tom Patreanu, the new addition to our excellent 24/7 monitoring team. Tom is studying to be a full-stack developer with an avid interest in economics and cryptocurrency markets.
Conferences: Our research analyst, Sara Wiesner, was at 37C3 in Hamburg, the yearly digital rights and futurism focused event.
January commentary
Days after FTX’s collapse in November 2022, we wrote:
“This is the equivalent of a forest fire. As bad as it is, it will clear the forest of debris, open it up to sunlight and create fertile ground for the next period of growth.” The recent ETF hype cycle and price lift-off shows the foundation is there for the next period of real growth in Bitcoin.
Galaxy Digital forecasted an inflow of $125bn to $450bn in Bitcoin ETFs in the next few years, assuming 10% of global funds will allocate 1% of their assets. “We expect other markets to follow the US… A wide range of other investment vehicles are likely to add Bitcoin to their strategies.'' they wrote.
As long as all the 11 ETFs approved by the SEC on January 10th are managed with transparency, they’re a huge positive for crypto prices. But there are many eyes on blockchain analytics ready to count how many BTCs are held by each ETF at any time.