Sell Pressure | TL;DR 1/26/2024

It was another down week across the board in crypto markets. Let’s break it down across macro, crypto beta, and token-specific drivers.

Macro

Data released this week continues to point to a strong US economy. GDP in the fourth quarter of 2023 beat expectations, rising at a +3.3% annualized pace. 

Another important macro data point that was released today was the Personal Consumption Expenditures (PCE) price index, which is the inflation gauge the Fed prefers to consider when making rate change and other decisions. Inflation rose +0.2% month-over-month (as expected), and consumer spending remained healthy (+0.7%), beating expectations of +0.5%.

Crypto Beta

As we mentioned last week, the market is still digesting the short-term impact of the spot BTC ETF launches. The latest flows across the ETFs are depicted in the waterfall chart below.

The net flows across all ETFs were +$745M, with Blackrock collecting the most assets so far, and Grayscale realizing significant outflows after converting its closed-end trust to an open-ended ETF. We did find out this week that the FTX bankruptcy estate was responsible for selling ~-$1B of GBTC. And, in more news related to near-term, idiosyncratic BTC sell pressure, the US government filed notice yesterday to sell over -$100M of BTC seized from a Silk Road agent.

Token-Specific

Within the crypto market, we see that the Protocols sector (-9%) suffered the most. ETH (-10%) fell more than BTC (-3%), softening after its recent run of outperformance. 

We observed the largest dispersion in the Utilities sector (-8%). The oracle network, Pyth, was the best performing token up +20%. Meme token, Ordi, which is the first fungible BRC-20 token that was created using the Bitcoin Ordinals protocol, registered the worst performance for the week down -27%.

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