Tuesday, Jan 23, 2024

BTC's slump is not about GBTC, why the space race matters, metaverse moves

“Far more crucial than what we know or do not know is what we do not want to know.” – Eric Hoffer ||

Hi all! I hope you’re managing to stay warm and dry! Sorry for the delay today, was hoping to get sound recording included in this edition, but no, it’s not working out, so rather than delay more, I’ll try again tomorrow.

You’re reading the daily premium Crypto is Macro Now newsletter, where I look at the growing overlap between the crypto and macro landscapes. There’s also usually some market commentary, but I don’t give trading ideas, and NOTHING I say is investment advice. For full disclosure, I have held the same long positions in BTC and ETH for years, and have no intention to either buy more or sell in the near future.

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Note: I’m speaking at BlockWorks’ upcoming Digital Asset Summit conference in London on March 18-20. Normally I say no to conferences, but this is one of the very few worth travelling for. If you’re thinking of going, it’d be great to say hi, and here’s a discount code you can use: CIMN10.

IN THIS NEWSLETTER:

• The BTC wash-out

• The race for space

• The race for the metaverse

• A Bitcoin narrative update from Lyn Alden

WHAT I’M WATCHING:

The BTC wash-out

Yesterday was brutal in crypto markets, both in terms of price movements and narrative shifts.

(chart via TradingView)

As I type, BTC is below $39,000 for the first time since early December, and from what I can see on X this morning, the chattering crypto crowd is pointing the finger at Grayscale. I think this is largely incorrect, for two main reasons:

1. the outflows are not a surprise, nor are they bad news, nor are they likely to continue at this rhythm for long

2. there are a lot of other reasons why BTC would be dropping that the short-term narrative curators seem to have forgotten about.

Let’s look at the GBTC outflows first

Expectations (including mine) were that outflows from Grayscale’s GBTC fund after its conversion to an ETF would calm down – so far, they seem to be intensifying. Yesterday, GBTC saw its steepest daily outflow so far, with the loss of $640 million bringing the total AUM down to $21.5 billion.

(table via @JSeyff)

But while the pace is stronger and longer-lasting than expected, it is likely to soften.

There are two threads to pull on here: one is the nature of the outflows, and the other is what happens next.