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When you own shares of an investment fund, it’s sometimes easy to see that your manager is doing a good job, but at times, you need to dig deeper to realize it. Over the past six months, just as it is currently, the Rivemont Crypto Fund has been fully invested in BTC. This allocation is actually unusual for the fund, which, throughout its existence, has liked to seize opportunities and also left a significant place for ETH due to its perfect non-correlation with BTC.
In the chart below, you can see the ETH/BTC ratio, which represents the relationship between the returns of the two cryptocurrencies:
source: Tradingview
The ratio is consistently declining, indicating that ETH’s performance is increasingly underperforming compared to BTC. Our decision to temporarily neglect ETH has proven fruitful for our unit holders.
Apart from ETH, there is another quick way to compare the performance of BTC to the overall market, and that is the BTC dominance. If it is on the rise, BTC becomes more attractive than the altcoin market, and vice versa.
source: Tradingview
One can quickly see on the chart above that BTC dominance is on the rise, clearly indicating that, at present, the altcoin market is still awaiting a reversal. We can assure you that we will be ready and prepared when that happens.
In conclusion, the composition of the Rivemont Crypto Fund portfolio has never been simpler, but it perfectly matches the current state of the crypto market.
With just a few weeks left until the January 10 deadline for a decision by the SEC on a Bitcoin spot ETF, this is still the topic making headlines in the industry. Earlier this week, SEC Chairman Gary Gensler announced that the agency is re-examining applications for Bitcoin spot ETFs, in light of a significant court ruling in October regarding Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. In an interview with CNBC, Gensler revealed that the SEC is currently reviewing between eight and twelve filings. While many of these applications have been rejected in the past, a court ruling in the District of Columbia has prompted the SEC to reconsider its stance. Gensler emphasized that as the SEC Chairman, he refrains from prejudging any decision. He reiterated that the commission acts in accordance with laws enacted by Congress and their interpretation by the courts. Additionally, he described the cryptocurrency space as the “Wild West,” drawing attention to cryptocurrency firms’ non-compliance with securities laws, as well as the presence of fraud and bad actors in the industry. Gensler also highlighted the lack of fundamental information on many cryptocurrency projects and criticized the practices of some intermediaries, such as cryptocurrency exchanges, for their unauthorized actions in other sectors of the financial system.
BlackRock has recently made key changes to its Bitcoin exchange-traded fund (ETF), according to a statement to the SEC. The fund, now named iShares Bitcoin Trust, will bear the ticker symbol IBIT and will exclusively limit itself to cash creations, eliminating the option for in-kind creation with Bitcoin. This decision reflects the SEC’s concerns about registered brokers’ use of Bitcoin. Bloomberg Intelligence analyst Eric Balchunas pointed out that this cash creation approach eliminates the need for unregistered subsidiaries to interact directly with Bitcoin. These changes come amid growing expectations for the SEC’s approval of the first Bitcoin spot ETF in the United States. Initially, the fund was expected to bear the symbol IBTC, but it was changed for compliance reasons with other BlackRock products in Europe.
In a recent interview with CNBC, Michael Sonnenshein, CEO of Grayscale, expressed optimism for the Bitcoin market, highlighting the increasing interest from investors in the cryptocurrency. He emphasized the imminent arrival of Bitcoin spot ETFs, which could open up the market to a portion of the investment community that has not yet had the opportunity to invest in Bitcoin. Sonnenshein mentioned the advised market in the United States, estimated to have around $30 trillion in advised wealth. On the other hand, Samson Mow, CEO of Jan3, and Michael Saylor, co-founder of MicroStrategy, also expressed positive opinions about the impact of Bitcoin ETFs on prices and the market. Mow predicts that ETFs could propel Bitcoin’s price to $1 million due to competition among asset managers and beneficial advertising for Bitcoin. Saylor sees ETFs as the most significant development on Wall Street in 30 years, capable of catalyzing demand for Bitcoin and attracting institutional and retail investors.
In 2023, Coinbase’s stock recorded returns exceeding 400%, outperforming major tech giants and Bitcoin. Despite political pressure and the pending decision on the Bitcoin ETF, Coinbase’s CEO remains confident, anticipating a stock price of $200. According to TradingView data, the company’s COIN stock reached $162 on December 19, marking its highest level in 20 months. Coinbase and Bitcoin have moved in tandem throughout 2023, but towards the end of the year, the exchange’s performance seems to stand out significantly. Traders expect further increases in anticipation of potential approval of the first Bitcoin spot ETF in the United States.
The US District Court for the Northern District of Illinois has approved the settlement between Binance, one of the leading cryptocurrency exchange platforms, and the Commodity Futures Trading Commission (CFTC). This agreement follows violations by Binance and its former CEO, Changpeng ‘CZ’ Zhao, of the Commodity Exchange Act and CFTC regulations. Binance is required to pay a substantial fine of $1.35 billion to the CFTC and reimburse an equivalent amount in fees deemed unlawful. Zhao, on the other hand, must pay a $150 million fine. As part of this arrangement, it was highlighted that Binance knowingly attracted US customers while concealing their presence on its platform to evade compliance standards. Binance has committed to strengthening its Know Your Customer (KYC) procedures for all its sub-accounts and to exclude those that do not meet its compliance criteria. Additionally, the company must reorganize its internal governance with a board of directors incorporating independent members. This penalty is part of a broader agreement with US authorities, which requires Binance to completely withdraw from the United States and Zhao to resign from his position as CEO, after pleading guilty to money laundering-related charges. Zhao, considered a flight risk, remains in the United States pending his sentencing scheduled for February 2024, with a possible prison sentence of up to five years.
Terra founder Do Kwon temporarily avoids extradition to the United States. Initially scheduled to be extradited to the United States, a recent appellate decision means that Do Kwon will stay in Montenegro for the time being. This postponement of extradition follows a complaint filed by Do Kwon’s defense. Last month, a court had approved the extradition of the controversial cryptocurrency mogul. He will now wait in Montenegro until the court completes its review. The South Korean cryptocurrency magnate was arrested earlier this year on charges of attempting to travel with a fake passport. Do Kwon is the founder of Terraform Labs, the company behind the Terra blockchain protocol.
As news that comes as no surprise, SafeMoon, a DeFi cryptocurrency that gained popularity during the last bull market, has filed for Chapter 7 bankruptcy after its founders were indicted by the US Department of Justice for a multi-million dollar international fraud. As a result, the value of SafeMoon’s SFM token has dropped by 50%, reaching its all-time low at $0.00003270. The bankruptcy filing indicates that the company has between 50 and 99 creditors, estimated assets between $10 million and $50 million, and estimated liabilities between $100,000 and $500,000. Additionally, employees are being encouraged to file claims for unpaid wages as part of the bankruptcy. This situation stems from the US government’s legal action against SafeMoon’s executives, who are accused of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and money laundering. Authorities allege that the defendants deliberately misled investors and diverted millions of dollars for their own gain. Furthermore, the US Securities and Exchange Commission (SEC) has filed a civil lawsuit against SafeMoon and its executives for their alleged involvement in a massive fraudulent scheme related to the unregistered sale of crypto securities.
CryptoQuant analysts believe that several factors, such as the market valuation cycle, network activity, the Bitcoin halving, macroeconomic outlook, approval of spot Bitcoin ETFs, and the growth of stablecoin liquidity, could contribute to a positive year for Bitcoin in 2024. They suggest that Bitcoin could target $54,000 in the medium term and reach $160,000 as the peak price for this cycle. However, they also caution about the risk of short-term price correction, as recent investors have accumulated significant unrealized gains. In the short term, there is no doubt that the decision by the SEC is what all market participants are waiting for, as well as observing whether such a decision is already priced into the market or if it could potentially lead to a substantial price increase.
The presented information is as of December 20th, 2023, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
