Market updates

Bitget Hot Takes (March 11 - March 17, 2024) - Market Updates

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2024-03-19 | 5m

Bitget Hot Takes is the exclusive weekly newsletter series by Bitget Academy, which sums up BGB performance, what's new at Bitget, and the latest market movements.

The latest Bitget Hot Takes can be found here: All About Bitget | Market Updates

Central Themes

• Bitcoin new ATH: US$73,750.

• Solana briefly flipped BNB to become the fourth largest cryptocurrency.

• U.S. CPI data for February shows sustained inflation.

Week 11: Solana Flipped BNB To Become The Fourth Largest Cryptocurrency

The Ethereum network's Dencun upgrade finally went live. This upgrade introduced critical improvements like proto-danksharding, which aims at enhancing scalability and efficiency, thereby reducing transaction fees on Layer-2 networks. While primary Ethereum network users wouldn't see immediate fee reductions, the upgrade was a vital step towards Ethereum's goal of mass scalability and accessibility. Specific L2 platforms, such as Arbitrum and Base, have seen significant reductions in their transaction costs: Base's average fees dropped to $0.03 from around $1.50, while Arbitrum's fees decreased to just $0.04.

One thing worth mentioning here is the sentiment difference in Bitcoin and Ether markets, which is reflected on the net flows of these tokens into exchanges. After Bitcoin made the new ATH, Bitcoin owners quickly withdrew BTC to their wallets, leading to an outflow of US$2 billion last week. By contrast, US$609 million in ETH was transferred into exchange wallets, which could signal a somewhat bearish momentum for Ethereum. After all, it takes some more time for gas fees on Ethereum to reduce; the team's primary focus at the moment is still supporting L2s.

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Inflows into spot Bitcoin ETFs continued to drive up demand for the largest crypto, with some breaking their own record: BlackRock's IBIT with a single-day net flow of US$848,978,000 on March 13, VanEck's HODL with US$118,846,000 on March 12, and Franklin's EZBC with US$19,086,000 on March 14. The surge in inflows into VanEck Bitcoin fund is a result of their decision to cut down management fees to 0% until the end of this month, but it's still not enough to compete with IBIT and FBTC, whose weekly netflows stand at US$2 billion and nearly US$700 million, respectively. Futures Bitcoin funds continue to see declining interest, but leveraged funds like BITX remained quite popular. Inflows into BITX were recorded at US$393,811,000, into BITI (short Bitcoin futures fund) at US$24,279,000, mostly on March 11 and March 12, whereas US$57 million flew out of BITO last week.

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The average weekly volume of spot Bitcoin ETFs increased by half a billion U.S. Dollar, but all saw red this week not only because of the ongoing price corrections but also because of the latest the U.S. inflation data release. At 3.2% YoY, the headline inflation rose higher than the expected 3.1%, and the core CPI for February is 3.8% YoY compared to the forecast of 3.7%. U.S. Inflation has been swinging back and forth between 3% and 4% (YoY) since June 2023, turning itself into a real menace for the FED. Rate cut probability in June 2024, per market consensus, fell to just 55.5% one day ahead of the next FOMC meeting on March 20. This week is packed with other key economic events around the world, such as: bank meetings in the United Kingdom, Japan, Australia, and Brazil, together with inflation data release in the United Kingdom, Canada, and Japan. China will report activity data for the first two months of 2024, which could signal the pace of economic recovery and growth in one of the world's largest economies. These data points, including industrial production and retail sales, are essential for understanding China's economic trajectory and its implications for global markets.

Solana (SOL) achieved a significant milestone by (briefly) surpassing Binance Coin (BNB) on Sunday (March 17) to become the fourth largest cryptocurrency by market capitalisation at over US$90 billion. This surge was fueled by a 17% increase in Solana's price and was further bolstered by the burgeoning activity in the Solana-based memecoin sector, with Book of Meme (BOME) becoming a phenomenon overnight. The broader rally in Solana includes substantial DeFi activity and a TVL exceeding US$1.3 billion.

Setting The Tone: Monday Performance

Funding rates have been going down for Bitcoin futures markets, but were still at exceptional levels for Ether, hence the higher percentage of shorts on the markets. Bitcoin dipped to as low as US$66,594 yesterday and Ethereum to US$3,456, triggering some liquidations and resulting in lower number of open positions.

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Coinbase and mining stocks outperformed the broader stock markets with a 0.4% and 2.0% (weighted average) gains. Spot crypto ETFs reported US$21 million in trading volume yesterday - all closed at lower levels.

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