Bitcoin Finishes Strong After Another Choppy Week, BlackRock Amends ETF Application to Satisfy SEC, and Coming Inflation Data May Further Support Interest Rate Cuts in 2024

Takeaways

• Bitcoin has another choppy week but finishes strong: Mirroring last week’s trend, the price of bitcoin (BTC) had a choppy week, with BTC testing the $40.5k level on Monday morning before bouncing back above $43k. Bitcoin finished the week strong climbing to around $44k by Thursday.
• BlackRock amends bitcoin ETF application to allow for cash creation and redemption model: BlackRock filed an amended S-1 on Monday that favored the “cash” creation and redemption model for its spot bitcoin ETF over “in-kind” creation and redemptions. The SEC had been urging BlackRock to implement the cash model in conversations with the asset manager over the past months. Other aspiring bitcoin ETF issuers followed suit, including Valkyrie, Invesco, and Galaxy Digital.
• Ether has mild week and loses ground on bitcoin as ETF decisions delayed: The price of Ether (ETH) remained subdued during the week, with the ETHBTC pair dropping to its lowest level in the past two weeks, moving below 0.051. The SEC also announced it would be delaying its decision on a number of Ethereum ETFs, as expected. ETH is sitting around $2,200 as of Thursday.
• Inflation data coming Friday may further increase likelihood of rate cuts in 2024: Core Personal Consumption Expenditure (PCE) for November will be released on Friday and is expected to come in at 3.3%, down from 3.5% in October, reaching its lowest level since early 2021. This should add to recent positive inflation data and increase the likelihood of interest rate cuts in the coming year.

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Bitcoin Price Regains $44k After Another Choppy Week

Mirroring last week’s trend, the price of bitcoin (BTC) had a choppy week, with BTC testing the $40.5k level again on Monday morning before bouncing back above $43k after BlackRock amended its spot bitcoin ETF application to align with requests from regulators that the funds use a “cash creation and redemption” model rather than “in-kind.” Market participants appear to be continuing to buy up BTC following any dips in price. Bitcoin finished the week strong climbing to around $44k by Thursday.

Amended BlackRock Spot Bitcoin ETF Application to Use Cash Creation and Redemption Model

As noted last week, the market had been waiting to see if Blackrock could persuade the Securities and Exchange Commission (SEC) to allow “in-kind” redemptions for the upcoming bitcoin spot ETFs. It appears that Blackrock has bowed to the SEC, filing an amended S-1 on Monday that excluded the “in-kind” creation and redemptions for its Bitcon spot ETF, favoring the “cash creation and redemption” model.

Other ETF issuers seeking to launch a spot bitcoin ETF followed suit, with Valkyrie, Invesco, and Galaxy Digital all amending their applications last week to switch to cash creation and redemption models. Although issues had been urging the SEC to allow an in-kind model, the shift to a cash model may pave the way for the mass approval of the first spot Bitcoin ETFs in the US by the January 10, 2024, deadline.

Ether Loses Ground on Bitcoin and SEC Delays Decisions on Spot Ether ETFs

The price of Ether (ETH) remained subdued during the week, with the ETHBTC pair dropping to its lowest level in the past two weeks, moving below 0.051. Earlier in the week, the SEC announced it would be delaying its decision on a number of Ethereum ETFs, as expected. The delays included Hashdex’s Ethereum ETF and Grayscale’s Ethereum Futures ETF, pushing the final SEC decision date out until May 2024. ETH is sitting around $2,200 as of Thursday.

Inflation Data Expected to Show Continued Cooling, Strengthening Likelihood of Interest Rate Cuts

Core Personal Consumption Expenditure (PCE) for November will be released on Friday and is expected to come in at 3.3% on an annual basis, down from 3.5% in October, reaching its lowest level since early 2021. This should add to recent positive inflation data and increase the likelihood of interest rate cuts in the coming year.

The optimism around the potential for rate cuts in 2024 has continued to drive US equities higher this week, with the Dow Jones Industrial Average posting another all time high close on Tuesday of 37,558. The S&P 500 also gained this week and is closing in on it's all time highs.

BONK Surges Another 60% as Solana Saga Phones Sell Out

Memecoins continued to make moves this week, with the Solana-based dog-themed token BONK giving the Solana Saga phone a boost. The phone went on sale earlier this year retailing at $1,000, which was reduced to $599 after early disappointing sales. The phones sold out last week after it was announced that 30 million BONK tokens would be airdropped to every phone owner, which at one point was worth more than the cost of the phone. BONK has been one of the best performing tokens over the past month, trading up almost 350% this month.

-From the Gemini Trading Desk