As the success of the Bitcoin ETFs (and associated price action) continues to accelerate, the conversations we are having have shifted from nervously asking “are you still doing that crypto thing?” to “have I missed it?”. It is likely no coincidence that this is occurring as Bitcoin if hovering around the previous all-time-high.
The last time Bitcoin breached a prior all-time-high was in December 2020 (~$19K). Less than a month later, the price of Bitcoin doubled. Over the next year Bitcoin went on to make it’s recently passed all-time-high of ~$69K, while the rest of the crypto market had significantly higher returns (the top 10 tokens by year-end 2021 outperformed Bitcoin by 4,000% on average in 2021). Back then there was no Bitcoin ETF, no Ethereum ETF on the horizon, and no leading financial institutions taking the concept of tokenization all that seriously. The technology was also far less scalable, and further away from producing mainstream applications that abstracted away the underlying technology than it is today. To that end, both January and February of 2024 produced all-time-highs in terms of daily active users of blockchain based applications.
Nevertheless, the increased interest made us reassess our own convictions and make sure we understood where we are in the cycle. The below charts and commentary led us to the following conclusion: we are just getting started.
Motus Chart Pack – Just Getting Started
Crypto’s history is marked by events that many said would “kill” the market. None of them have, it just has continued to grow in adoption. Below is a visual of the wave of what many believed to be catastrophic events in blockchain’s history. Since none of those could kill blockchain, the absence of those very bad things is, on the margin, a massive positive.
(Source: Pantera)
The most recent commentary to get debunked is that “crypto was just a product of low interest rates”. Try again….
(Source: TradingView)
Bitcoin price has been highly correlated with global liquidity over the past few cycles. Global liquidity just started to increase.
(Source: Bloomberg)
Bitcoin Spot ETF Cumulative Flow (US$m) continue to accelerate. This has occurred even while some of the largest financial institutions in the world (ie. Citi, Bank of America, Wells Fargo, Vanguard, and others) do not allow their customers to access these products…yet.
The next unlock here will be the approval of options on these ETFs, and importantly structured products which are popular amongst private bank clientele. Given the volatility of the underlying, very attractive payoff profiles can be constructed. As of now, the ETFs are only approved for trading on an unsolicited basis at most institutions, while structured notes by the their nature must be solicited. In order to solicit these products, there needs to be sell-side research that supports a higher price target. We know this because we attempted to put this in place at our prior firm. Expect bullish targets from the major asset managers/research firms…
Bitcoin Spot ETF Total Cumulative Flow (US$m)
(Source: Farside)
Long-term holders are still mostly holding strong, currently possessing about 75% of all BTC supply. In just the last few days, we have seen a small decline – signifying a marginal transfer of coins from long to short term hands – the magnitude is nowhere near what we’ve seen in prior cycles.
History doesn’t repeat, but it often rhymes. While we are not predicting this will happen, if BTC hits the top of the current chart, it would still be <40% of the market cap of gold. In our opinion, BTC is more attractive to hold for more people in the world given its global accessibility and ease of transfer.
“I’ll wait for the dip”. If you miss the 10 best days of Bitcoins return each year, you miss all the return. And you don’t know when those days will be. Waiting can be costly.
(Source: Fundstrat)
Broad retail participation has just started, and is nowhere near 2021 peak levels.
Google Trends plot for ‘buy crypto’
(Source: Junglebeat)
Highest Crypto App Rank – All Apps
(Source: Junglebeat)
Please reach out with questions, comments, or feedback.
Sincerely,
Team Motus
Past performance is not indicative of future results. This communication does not constitute an offer to sell or solicitation of an offer to buy the Interests in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation in such jurisdiction. This communication is being provided solely as a high-level overview and is not intended to be relied on for the terms of any offering.