Alts Maintain Their Lead, While Bitcoin Spot ETF Anticipation Gains Speed

• The US SEC is reportedly in discussions with Grayscale regarding a spot bitcoin ETF
• Ark Invest is preparing to launch a new suite of digital asset ETFs with 21Shares
• Grayscale Chainlink Trust traded at a 200% premium to spot price

Alts extend their lead over bitcoin for a second consecutive week

The crypto markets maintained their upward trend, with the total market capitalization of the crypto universe increasing by 3.1%. Bitcoin dominance slipped below 52% as ether and alts continued to outperform bitcoin for yet another week. Among the majors, bitcoin recorded a modest 0.6% weekly gain, while ether rose 2.3% week on week.

In the domain of major Layer 1 coins, Cardano distinguished itself with an impressive 16.6% rally in value this week. Notably, earlier this month, Cardano announced its plans to leverage the underlying framework of Polkadot, a competing L1 chain, which itself rallied by 6.8% this week. In contrast to previous weeks, Solana showed a minor slowdown in its recent strong momentum, still managing a 4.2% gain for the week, and an impressive 300+% increase year to date.

Among the major L2s, Polygon (MATIC) made an impressive 18.2% surge this week. The Near Foundation, a non-profit organization supporting the Near Protocol, and Polygon Labs recently revealed a strategic partnership to develop zkWASM, a zero-knowledge (ZK) prover for WebAssembly-based blockchains. This collaboration is geared towards improving interoperability among different blockchain networks. As of the latest data, MATIC has seen a remarkable 27% increase in value since the activation of the smart contract for the upcoming POL ecosystem token in late October, a pivotal element of the extensive network upgrade known as Polygon 2.0.

The decentralized oracle network Chainlink (LINK) soared over 28% in the past week. Chainlink so far had a remarkable year, witnessing a 160% gain year to date. Key highlights include the launch of the Chainlink cross-chain interoperability protocol (CCIP), successful experiments with ANZ and Swift for tokenized value transfers, and the partnerships with Vodafone's Digital Asset Broker for trade ecosystem improvements. Chainlink is set to launch LINK staking v0.2 in December, building on the growing adoption of cross-chain operations and collaborations with major financial institutions, contributing to its positive price momentum. Grayscale's Chainlink Trust, giving US investors access to LINK, traded at an impressive 200% premium to the spot, indicating a strong institutional demand.

Among the old memecoins, Dogecoin rallied 9.1% this week. The coin also saw a surge in open interest on DOGE perps across the board with spikes in funding rates this week. In the realm of DEXes, UniSwap rallied 8.8%, while SushiSwap dropped 11.8% compared to the previous week.  Among major DeFi borrow lending protocols COMP rallied 9%, while AAVE posted a weekly gain of 12.3%. Most of the major gaming tokens posted double-digit weekly gains this week: MANA(12.5%), SAND(13%), ENJ(15.6%), GALA(15.8%).

Traders' anticipation soars: Bitcoin ETF at the forefront once more

Ark Invest is gearing up to introduce a fresh lineup of digital asset ETFs in partnership with 21Shares. These ETFs are slated for listing on the Chicago Board Options Exchange (Cboe), as outlined in the prospectuses. The forthcoming launch will encompass five distinct products set to commence trading in the upcoming week. In addition to bitcoin and ether futures contracts, one of the offerings will allocate investments to a diverse portfolio, which includes public equities of companies actively involved in the blockchain sector, as stated on 21Shares' website.

As per a Coindesk report, the US Securities and Exchange Commission (SEC) is engaging in discussions with Grayscale Investments regarding the company's request to transform its leading fund into a spot bitcoin ETF. This development follows a ruling by three judges in the US Court of Appeals for the DC Circuit in August, mandating the SEC to re-examine Grayscale's application for a spot bitcoin ETF. The court emphasized the SEC's differing treatment of spot bitcoin ETFs compared to funds based on futures contracts, which the regulator has previously greenlit. Grayscale recently filed a fresh application for the fund, aligning with the court's formal mandate.

According to analysts at Bloomberg Intelligence, Eric Balchunas and James Seyffart, the SEC is facing a narrow eight-day window commencing on Thursday, within which it can potentially approve all or any of the 12 spot bitcoin ETF applications for the year. The recent price surge that pushed bitcoin to new yearly highs may be attributed to traders anticipating this development, while the surge in alts might be crypto OG investors positioning themselves for the high beta run if bitcoin catches a bid upon the eagerly anticipated spot bitcoin ETF approval. 

Macro pulse 

Among TradFi assets U.S. equities rallied 3.4% compared to the previous week, bolstered by growing investor confidence in the notion that interest rates have nearly reached their peak for this economic cycle. In contrast, oil futures continued their descent due to worries about declining demand, plummeting an additional 6.6% this week. Elsewhere the US Dollar index dropped by 80bps, the 10-year US Treasury yields slipped by 23bps, and the Gold & Silver index fell 1.4% week over week.

*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on November 09, 2023 

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