The parabolic upswing by Bitcoin has eased somewhat as the largest cryptocurrency by market capitalization entered a consolidation phase around the $8000 level. It remains to be seen how long the price will be able to remain at this level, as the temptation to take profit will rise by the day. At the same time, the FOMO effect could easily push the price all the way through $10,000 level in the blink of an eye.
Interestingly enough, Ethereum has outperformed its bigger brother in the last 24 hours and continued to push higher. As a guide, Ethereum is down around 60% Y/Y basis, while Bitcoin’s recent rally means that Y/Y the price is nearly flat. As such, relative value (RV) plays may come into action and result in a narrowing of the price gap, even if only partially. Also of note, the Ethereum contango spread on Deribit has widened to $8 (perp - Sep), having traded close to $2 earlier this month (during the initial push higher in April, the contango was as wide at $15). It is also worth keeping an eye on the DeFi market to gauge the appetite for risk, as of now the DIPOR stands at 19.38%.
In other news, the US Securities and Exchange Commission (SEC) again delayed a decision on whether to approve or reject a bitcoin exchange-traded fund (ETF). In a new document published by the SEC, the regulator said it would hold off on making a decision on the Bitwise ETF proposal filed with NYSE Arca.
Elsewhere, joint research by consultancy firm PwC and investment firm Elwood Asset Management indicated that the median crypto hedge fund AUM has grown to $4.3 million at the end of Q1 2019 compared to $1.2 million in January 2018. In addition to that, based on interactions with 100 crypto hedge funds, the average AUM fund was measured at $21.9 million for Q1 2019.
Finally, the government of the German state North Rhine-Westphalia (NRW) announced plans to establish the European Blockchain Institute in order to research blockchain technology. This coincides with a Bloomberg report, citing the Bank of France, that claims the central bank is observing with great interest initiatives in the private sector which aim at developing networks within which ‘stable coins’ would be used in transactions involving ‘tokenized’ securities or goods and services.
Thank you for reading,
The BeQuant’s Analytics team