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Thanks for reading The BlockByte Weekly, where we summarise the key updates in crypto over the last week and provide our perspective on what you need to know as an investor.
Executive Summary
- Bitcoin falls from new all-time-high of US$108k
- Alts and Solana in particular struggle, but the onchain metrics remain positive
- Massive institutional adoption continues as ETFs gobble up more bitcoin, SOL ETF launches expected in 2025/26
Market Update
If you could capture the current market sentiment in one picture, this would be it. Almost everything is down from their all-time highs and there is a lot of uncertainty moving into 2025 over the holidays. But don't despair, let's dive into the detail of some of the main stories to see if the sky really is falling, and what to look forward to in 2025.
Bitcoin Falls 15% from All-time-highs of $108k, but bounces back quickly
It's a headline that bitcoiners would have dreamt about 6 months ago. But still, corrections are never nice. The last 7 days and indeed the month of December in general has seen more volatility and swings than November which was largely up and to the right. On the 17th of December, bitcoin hit US$108,230 wicking down to $92,089 on December 20th. This 15% correction is mild historically-speaking, and prices have since recovered to above $97,000. The fall that began on December 18th was largest catalysed by the 0.25% rate cut in the US on the back of Jerome Powell's comments that more cuts would have to be considered in light of inflation - a more cautious sentiment than the market had expected to end the year on.
Altcoins have a bad week too, but why is Solana struggling more?
Altcoins expectedly had a rougher ride than bitcoin, with the altcoin market down 22% for the week. The largest altcoins ETH (-16%), Solana (-19%), XRP (-9%) all had relatively similar drawdowns to bitcoin. However, Solana sentiment seems to have been the most bearish, falling 33% since its high of US$264 set back on November 24th. The question on many investors minds, including ours, is: why has Solana underperformed recently, perhaps more so than expected?
Taking a look at some of the on-chain data provided by Artemis, it seems like much of the sell-off is driven by sentiment, rather than fundamentals. For example, Solana overtook Ethereum in October 2024 for most daily active addresses and is also leading in terms of daily transaction count by a wide margin. Whilst Ethereum continues to lead on stablecoin volumes and total value locked (TVL) to earn interest in staking, from our perspective there hasn't been any notable decline in Solana's on-chain metrics to account for the pullback other than a natural correction.
No major Solana declines in daily active addresses:
Daily transaction count for Solana also looks bullish
We'll close out this section by adding the link to a presentation by Kyle Samani, CEO of Multicoin Capital from just over a week ago where he delves into Solana a little deeper as part of his 5 key trends for 2025 to look for in crypto. Definitely worth a watch:
The ETF Flows & Institutional Buying Levels Are Enormous & Not Slowing Down
In a little under a year since launching, BlackRock's bitcoin ETF (IBIT) assets reached US$33.2 billion, overtaking the $32 billion held in BlackRock’s gold ETF. Their gold ETF has been around for 20 years. Let that sink in.
When taking a step back at the ~US$18T market cap of gold, and realising that even at today's prices bitcoin is 9x smaller at $2T, and the total crypto market cap is ~$3.3T, we believe we have much to look forward to as investors. Earlier in the month, Charles Schwab Corporation, a global asset manager with over US$7T in AUM, also announced that they they will begin offering digital assets to their client base.
We have well and truly entered the era of institutional crypto adoption. On that note, we wish you and all our subscribers a happy and safe holiday season.
Our newsletters will begin again on January 6th 2025 - however our trading desk and platform will remain open throughout the holidays.
Until then, have a Merry Christmas and Happy New Year.
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