Crypto Daybook Americas: Banks Favor King Dollar as BTC Tug-of-War Rages

By Omkar Godbole (All times ET unless indicated otherwise)

Bitcoin's bull-bear tug-of-war continues to rage, with prices recovering to over $97,000 from Monday's dip to $94,200. The slide was prompted by concern Google's new quantum-computing chip, Willow, could compromise BTC's security — a worry quickly dismissed by analysts.

That leaves directional traders with little to do other than wait for the dust to settle before picking a side, as prices remain locked in Thursday's indecisive trading range.

But there’s a silver lining! The turbulence has crowded out those undisciplined, overleveraged altcoin traders, as is evident from perpetual funding rates. Altcoin rates have receded closer to the center of Velo Data's heat map, which oscillates between -200% and 200%, indicating more balanced conditions than the bullish extremes of last week. Tokens like Stacks' STX even sport negative funding rates, a perfect entry point for bulls, according to pseudonymous analyst Byzantine General.

"If these rates continue to decline, it could signal the unwinding of excessive long leverage, potentially leading to a more balanced market," analysts at Bitfinex said, adding that $100,000 is no longer the key support/resistance level and a new equilibrium is probably forming in spot markets.

That said, as we look toward the end of 2024, there’s a developing story: Banks are getting bullish on the dollar, which doesn’t usually bode well for assets denominated in the U.S. currency, like BTC and risk assets.

"The combination of cyclical, fiscal, and U.S. political forces is making the USD stronger again," HSBC said recently. "We update our USD bullish view further; the USD bubble is re-inflating, which spells trouble ahead for many other currencies." Citibank sees the dollar index (DXY) rallying to 115, an 8% increase.

Keep an eye on the Far East too. A renewed rally in Chinese stocks following Beijing's promise of more stimulus could suck capital from other markets, including cryptocurrencies.

Amid all this, there's talk President-elect Trump may struggle to deliver his crypto promises. Peter Tschir, head of macro strategy at Academy Securities, put it best: "Trump does have loyalty to those who helped fund his campaign, but I don't see this as a lasting relationship, especially as he will likely get a lot of pressure from the National Security element of D.C. to be cautious on helping crypto too much."

After all, it's one thing to promise big from Mar-a-Lago and a different ball game when delivering from the White House. Stay Alert!

What to Watch

• Crypto:
  • Dec. 10, 11:30 a.m.: Microsoft's annual shareholders meeting. The meeting will include MicroStrategy Executive Chairman Michael Saylor's 44-slide presentation on investing in Bitcoin. Microsoft will then disclose the voting results. Livestream link.
  • Dec. 13: The annual Nasdaq-100 reconstitution. Changes to the index, if any, are announced on this day. MicroStrategy (MSTR), the world’s largest corporate holder of bitcoin, is widely expected to be added to the index.
  • Dec. 18: CleanSpark (CLSK) Q4 FY 2024 earnings. EPS Est. $-0.18 vs Prev. $-1.02.
• Macro
  • Dec. 11, 8:30 a.m.: The U.S. Bureau of Labor Statistics (BLS) releases November’s Consumer Price Index (CPI) data.
    • Inflation Rate YoY Est. 2.7% vs Prev. 2.6%
    • Core Inflation Rate YoY Est. 3.3% vs Prev. 3.3%
  • Dec. 11, 9:45 a.m.: The Bank of Canada announces its policy interest rate (also known as overnight target rate and overnight lending rate). Est. 3.25% vs Prev. 3.75%. A press conference starts at 10:30 a.m. Livestream link
  • Dec. 12, 8:15 a.m.: The European Central Bank (ECB) announces its latest monetary policy decision (three key interest rates) followed by a press conference at 8:45 am.
    • Deposit facility interest rate Est. 3.0% vs Prev. 3.25%.
    • Main refinancing operations interest rate Est. 3.15% vs Prev. 3.4%.
    • Marginal lending facility interest rate Prev. 3.65%.

Token Events

• Governance votes & calls
  • Horizen to hold community call discussing ZEN halving and future plans at 8 a.m.
• Token Launches
  • Movement's MOVE has added 63% since going live on Monday, reaching a $2.5 billion market capitalization.
  • Binance listed SPX, VIRTUAL, RAY and KOMA on futures.
• Hacks
  • The Clober Liquidity Vault has been hacked, resulting in a loss of 133 $ETH (worth ~$500K). The exploiter has already bridged the stolen funds from Base to Ethereum.

Conferences:

• Dec. 9 - 10: Bitcoin MENA 2024 (Abu Dhabi, UAE)
• Dec. 9 - 12: Abu Dhabi Finance Week 2024 (Abu Dhabi, UAE)
• Dec. 9 - 13: Luxembourg Blockchain Week 2024
• Dec. 12 - 13: Global Blockchain Show (Dubai, UAE)
• Dec. 12 - 14: Taipei Blockchain Week 2024 (Taipei, Taiwan)
• Dec. 13: Limitless Crypto 2024 (San Juan, Puerto Rico)
• Dec. 16 - 17: Blockchain Association’s Policy Summit (Washington)
• Jan. 13 - 24: Swiss WEB3FEST Winter Edition 2025 (Zug, Zurich, St. Moritz, Davos)
• Jan. 17: Unchained: Blockchain Business Forum 2025 (Los Angeles)
• Jan. 18: BitcoinDay (Napes, Florida)
• Jan. 21: Frankfurt Tokenization Conference 2025

Token Talk

By Shaurya Malwa

Everything with "quantum" in the name is pumping!

Various tokens themed after, or claiming to use, quantum computing within their technology stack jumped more than 100% in the past 24 hours after internet giant Google unveiled Willow, a quantum-computing chip that took 5 minutes to solve tasks during its testing period that would have taken 10 septillion years for current supercomputers to finish.

Crypto markets took a hit after the announcement on concerns the development was long-term bearish for bitcoin and other blockchains, whose security features can, in theory, be exploited by quantum computers.

But while the entire market dropped, tokens such as Quantum Resistant Ledger (QRL), Quantum Network, Quantum Swap, among others, zoomed higher.

Quantum-resistant or post-quantum tokens aim to use cryptographic algorithms believed to be secure against quantum computing attacks. These algorithms are designed to resist attacks using Shor’s algorithm, which is particularly effective against current public-key cryptosystems.

Tokens labeled with "quantum" might be perceived as being at the forefront of technology, even if their actual utility or relation to quantum computing is minimal. This perception can drive investment — and a chance to speculate on the short-term trading narrative.

Derivatives Positioning

• Perpetual funding rates in DINO coins have normalized as Monday's price drop triggered a decent leverage washout.
• ETH's implied volatility term structure remains in backwardation, pointing to higher near-term volatility.
• A notable BTC options trade included a long position in the $150,000 strike call expiring in March. Meanwhile, someone sold the ETH $5,000 call expiring at the end of March in large numbers, collecting nearly $1.8 million in premium.
• Short-term BTC and ETH calls are now trading at less than 2 vol premium to puts, a sign of weakening bull bias. (Source: Amberdata, Deribit, Velo Data)

Market Movements:

• BTC is up 0.76 % from 4 p.m. ET Monday to $97,763.77 (24hrs: -0.3%)
• ETH is up 1.66% at $3,765.44 (24hrs: -2.23%)
• CoinDesk 20 is up 1.78% to 3,954.73 (24hrs: -4.54%)
• Ether staking yield is up 15 bps to 3.2%
• BTC funding rate is at 0.01% (10.95% annualized) on Binance

• DXY is up 0.23% at 106.39
• Gold is up 1.24% at $2,697.9/oz
• Silver is up 0.9% to $32.51/oz
• Nikkei 225 is up 0.53% unchanged at 39,367.58
• Hang Seng is down 0.5% at 20,311.28
• FTSE is down 0.63% at 8,299.38
• Euro Stoxx 50 is down 0.45% at 4962.94
• DJIA closed on Monday -0.54% to 44,401.93
• S&P 500 closed -0.61% at 6,052.85
• Nasdaq closed -0.62% at 19,736.69
• S&P/TSX Composite Index closed -0.26% at 25,625.40
• S&P 40 Latin America closed +1.15% at 2,356.64
• U.S. 10-year Treasury was unchanged at 4.23%
• E-mini S&P 500 futures are unchanged at 6,064.50
• E-mini Nasdaq-100 futures are unchanged at 21,488.00
• E-mini Dow Jones Industrial Average Index futures are unchanged at 44,455.00

Bitcoin Stats:

• BTC Dominance: 56.82% (-0.22%)
• Ethereum to bitcoin ratio: 0.03845 (0.76%)
• Hashrate (seven-day moving average): 773 EH/s
• Hashprice (spot): $61.93
• Total Fees: 15.97 BTC / $9.46M
• CME Futures Open Interest: 196K BTC
• BTC priced in gold: 36.7 oz
• BTC vs gold market cap: 10.46%
• Bitcoin sitting in over-the-counter desk balances: 432K BTC

Basket Performance

Technical Analysis

• The chart shows the price of the Nasdaq-listed ProShares UltraShort Bitcoin ETF (SBIT) and its 14-day RSI, a momentum oscillator.
• The RSI has diverged bullishly, contradicting the lower lows in prices in a sign of waning downward momentum. In other words, the ETF could see some gains in the short-term.

Crypto Equities

• MicroStrategy (MSTR): closed on Monday at $365.34 (-7.51%), up 2.72% at $375.49 in pre-market.
• Coinbase Global (COIN): closed at $310.52 (-9.63%), up 2.62% at $318.67 in pre-market.
• Galaxy Digital Holdings (GLXY): closed at C$26.72 (-10.64%)
• MARA Holdings (MARA): closed at $23.86 (-9.72%), up 1.82% at $24.29 in pre-market.
• Riot Platforms (RIOT): closed at $11.21 (-13.44%), up 1.52% at $11.38 in pre-market.
• Core Scientific (CORZ): closed at $16.04 (-5.59%), up 0.31% at $16.09
  in pre-market.
• CleanSpark (CLSK): closed at $13.56 (-9.42%), up 3.61% at 14.05.
• CoinShares Valkyrie Bitcoin Miners ETF (WGMI): closed at $28.58 (-7.63%).
• Semler Scientific (SMLR): closed at $62.12 (+0.6%).

ETF Flows

Spot BTC ETFs:

• Daily net inflow: $479.1 million
• Cumulative net inflows: $33.88 billion
• Total BTC holdings ~ 1.108 million.

Spot ETH ETFs

• Daily net inflow: $149.8 million
• Cumulative net inflows: $1.56 billion
• Total ETH holdings ~ 3.287 million.

Source: Farside Investors

Overnight Flows

Chart of the Day

• The rally in Nvidia (NVDA), which has traditionally shown a positive correlation with bitcoin, appears to have lost momentum.

While You Were Sleeping

• XRP, Dogecoin Dive 12% as Altcoin Carnage Leads to Highest Bullish Liquidation in Nearly 3 Years (CoinDesk): Major altcoins plummeted during early Asian hours Tuesday, with XRP, DOGE, and ADA dropping up to 15%, while Bitcoin fell 3%. Analysts pointed to an overheated market, Google's quantum chip announcement, and unusual sell orders, with forced liquidations of over $1.5 billion exacerbating the downturn.
  
• Russian State Duma Deputy Proposes Strategic Bitcoin Reserve (Bitcoin Magazine): On Monday, Russia's State Duma Deputy Anton Tkachev proposed to Finance Minister Anton Siluanov the creation of a strategic bitcoin reserve to bolster the country's financial stability, citing vulnerabilities of traditional currency reserves to inflation and sanctions. Tkachev highlighted cryptocurrencies' growing role in international trade amid sanctions, as Russia plans to experiment with cross-border crypto settlements.
  
• What Does Google's Quantum Computing Chip Mean for Bitcoin? (CoinDesk): Willow quantum chip marks a breakthrough, performing tasks in minutes that classical supercomputers would take ten septillion years to complete. While the 105-qubit chip highlights quantum computing’s potential, it remains far from the scale needed to compromise Bitcoin’s encryption. Crypto researchers, including Ethereum’s Vitalik Buterin, emphasize the urgency of developing quantum-resistant algorithms.
  
• Oil Prices Ease, but Geopolitical Risk and China Policy Stance Check Losses (CNBC): Oil prices eased slightly on Tuesday but retained earlier gains, driven by geopolitical risks after Syrian President Bashar al-Assad’s fall and optimism around China’s plans for economic stimulus. Traders also await U.S. supply data, with initial signals pointing to declining crude and gasoline stockpiles that could further shape price trends.
  
• India Rupee Hits Record Low, Bond Yields Dip as Change of Guard at RBI Spurs Rate Cut Bets (Reuters): The Indian rupee slid to a record low of 84.85 per U.S. dollar, while 10-year government bond yields declined. Traders expect a February rate cut under new Reserve Bank of India Governor Sanjay Malhotra, whose stance is seen as more dovish than his predecessor and who starts his three-year term on Wednesday.
  
• ECB Officials to Lock Horns Over How Much Cuts Can Boost Economy (Bloomberg): European Central Bank officials agree on the need for lower rates to support the EU's struggling economy but hold differing views on their effectiveness. Structural issues like high energy costs and geopolitical risks, such as the prospect of increased US tariffs on EU exports, may hinder efforts to stimulate spending and investment.
  
• RBA Hold Rates Steady But Sounds More Confident That Inflation Is Being Tamed (The Wall Street Journal): The Reserve Bank of Australia held its cash rate at 4.35% on Tuesday, signaling a more dovish stance by noting easing inflation risks and narrowing demand-supply imbalances. Business conditions appear to be at their weakest level since mid-2020, even as the RBA highlights a tight labor market and persistent core inflation pressures.

In the Ether