Dispatch #218: Bitcoin: Euphoria in uncharted territory

In this patch of your weekly Dispatch:

• SOL breaks a record
• Crypto’s future in numbers
• ETH whales show up

Market cast 

Bitcoin’s biggest gain sparks $100,000 hopes

Nexo co-founder Antoni Trenchev saw this coming, predicting Bitcoin’s march toward $100,000 over two years ago and doubling down on that forecast in 2024. For those seeking confirmation, November 11, 2024, provided it — marking the biggest daily gain in Bitcoin history in dollar terms. BTC has now surged to a new record high of $89,700, sparking widespread optimism across the crypto markets.

This rally isn’t driven by hype — it’s underpinned by solid fundamentals, including robust activity through spot Bitcoin ETFs and growing institutional interest in Bitcoin as a reserve asset. Last week alone saw over $2.2 billion in spot BTC ETF inflows, while daily trading volumes surpassed $140 billion. The rally’s strong momentum signals that the bulls remain firmly in control. While the Relative Strength Index (RSI) and other indicators show overbought levels, they don’t yet suggest an exhaustion of the trend. A breakout from the rising channel on the daily chart further confirms the overwhelmingly bullish sentiment.

Options traders are now eyeing the $100,000 target by year’s end, making Trenchev’s once-ambitious prediction look increasingly likely. After a brief dip to $86,000, where a potential support level could be forming, Bitcoin has settled just shy of $88,000.

The big idea

Crypto’s trajectory: from validations to valuations

Last week, we speculated about the future of crypto. Now, after an unprecedented rally, there is a clearer, positive prognosis. Standard Chartered head of global digital assets Geoff Kendrick believes a wave of institutional interest, coupled with favorable regulatory shifts, has given the digital asset ecosystem the foundation it needs to flourish. Kendrick highlights that a clear path toward mainstream adoption is coming, with predictions pointing to a market cap expansion to $10 trillion by 2026.

The bank's latest report highlights how the new U.S. administration could act as a catalyst for crypto growth. Key regulatory changes are expected, with the potential repeal of outdated rules like the SEC’s SAB 121 guidance, which has previously hindered crypto custodians and limited institutional involvement. Removing these barriers could unlock opportunities for banks and investors to engage more freely with digital assets. As for Bitcoin, Standard Chartered says $200,000 by 2025, bolstered by ongoing institutional inflows.

Ethereum

Monday saw US spot Ether ETFs rake in a record $294.9 million in inflows, smashing the previous launch-day record of $106.6 million. This surge in investor interest aligns with a spike in whale transactions, as key stakeholders have been driving up activity, pushing Ether to a 14-week high of $3,384. With transaction volumes hitting $10.4 billion, the momentum is clear. Santiment analysts suggest that if Bitcoin’s bull run continues, profits may flow into Ethereum, further propelling its growth.

Meanwhile, the Ethereum Foundation has unveiled the Mekong Testnet, a key milestone in the lead-up to the Pectra upgrade. This upgrade, designed to improve scalability and lower gas fees through the introduction of Verkle Trees, could provide a further catalyst for Ether’s growth, potentially driving it above $3,100 and closer to its all-time high.

Solana

Solana (SOL) has surged above $220, its highest level since the 2021 bull peak, surpassing its March-April highs with a 34% gain in the past week. Some analysts predict a new all-time high for Solana by year-end. Julien Bittel, Head of Macro Research at Global Macro Investor, views Solana's breakout as the start of the bull market’s "banana zone," where rapid, near-vertical rallies are likely, potentially leading SOL to record highs soon.

TradFi trends 

Banking on the blockchain

Banking giants are showing a growing interest in crypto beyond Bitcoin, with a strong focus on currency settlements and asset tokenization.

JPMorgan’s Kinexys expands for instant dollar-euro settlements: JPMorgan is launching instant dollar-euro settlements on its Kinexys blockchain, leveraging JPM Coin to speed up cross-border transfers. With $2 billion processed daily, Kinexys is set to add sterling support pending regulatory approval.

Deutsche Bundesbank joins Project Guardian to advance tokenization: Germany's Bundesbank has joined Project Guardian, a Singapore-led initiative by the Monetary Authority of Singapore (MAS) aimed at advancing asset tokenization. The global collaboration seeks to establish standards for cross-border digital asset frameworks.

Macroeconomic roundup

More macro after FED’s rate cut

Following the Federal Reserve's widely anticipated decision to cut its benchmark fed funds rate by 25 basis points to 4.5%-4.75%, the crypto market has reacted positively. Here’s what could paint the charts this week:

• Consumer price index (Wednesday): October’s inflation data is expected to ease, though a hotter-than-expected report could weigh on Bitcoin’s upward trend.
• Initial Jobless Claims (Thursday): A rise in jobless claims might fuel recession concerns, impacting risk asset appetite.
• Producer price index (Friday): Producer inflation data affects production costs. A higher PPI could pressure Bitcoin if inflation accelerates.
• Retail sales (Friday): A strong retail report would suggest economic resilience, supporting demand for riskier assets.

Hot in crypto

A pack of memecoins on the run

Dogecoin's latest rally to a three-year high has sent shockwaves through the meme coin market, with a pack of dog-themed cryptos running right behind. Trading around $0.29, DOGE is up 27% in 24 hours, fueled by Trump’s election win, and potential regulatory changes. The original meme coin isn't just wagging its tail; it’s setting the pace for others like Shiba Inu (SHIB), which jumped 26%, and Floki Inu (FLOKI), rising 20%. Meanwhile, Bonk (BONK) saw a surge in trading volume to $1 billion, accompanied by a 15% rise in price, signaling increased interest.

The week’s most interesting data story

Bulls in command?

Bitcoin’s options market is seeing a surge in bullish activity, driven by increasing institutional participation and rising prices. K33 Research notes that “Bitcoin options are seeing strong bullish sentiment, with the demand for upside calls increasing, especially as more institutional investors engage with the market.” This shift is reflected in record-high open interest and a skew toward higher strike prices, signaling expectations of continued upward momentum.

The numbers

Top 5 stats of the week 

• $4.1 billion – BlackRock's spot Bitcoin ETF (IBIT) reached its highest trading volume since launch.
• $22 billion – The total value of Ethereum ecosystem treasuries.
• $100 billion – Solana joins the $100 billion market cap club, hitting a nearly three-year high.
• $1.76 trillion – Bitcoin’s market cap hits a new all-time high.
• $10 trillion – Standard Chartered predicts the total crypto market cap could climb fivefold by 2026.

Hot topics

What the community is discussing

It’s history in the making, everyone!

Stay alert for corrections, traders.

It’s info finance for a reason.

Dispatch is a weekly publication by Nexo, designed to help you navigate and take action in the evolving world of digital assets. To share your Dispatch suggestions and comments, email us at [email protected].