PTGR – Strategic Digital Asset Management



Dear valuable clients,

Please find the following key insights from our aggregated research:

Overall Take-Home Message:

The price activity of bitcoin hasn’t paused despite a phenomenal price performance over the past quarter. The high of over $30,000 was met with resistance in April, and the price of bitcoin fell to a low of just over $27,000. Regarding price performance, the beginning of 2023 has been historically good. There have been very few notable corrections along the road, with the greatest being -18.6%. If we account for the possibility that the November low represents a longer-term bottom, we can observe that the magnitude of drawdowns experienced thus far during this upswing is modest compared to previous cycles.

The aggregate market has confidently moved from a regime of unrealized loss to one of unrealized profit with the robust start to 2023, as seen by the stark contrast between supply held in profit vs. loss. The motive to grab gains develops as a result of this.

The Realized Price, which represents the average acquisition cost of the supply, is currently trading at $19.900, and the Realized-to-Liveliness Ratio, which is presently trading at $33.000, are the two most often used On-chain pricing models.

This second model will trade at a greater price when more of the coin supply remains inactive in investor wallets. It is similar to a HODLer Implied Fair Value. Spot markets peaked in April at about $30.5k, falling short of this level.

This indicates that the market has moved back toward a holder suggested “fair value” level and has left the “deep-value” zone, as shown by trading below the Realized Price. We may also anticipate an increase in the likelihood of profit-taking behavior from coins bought at lower prices as a result of this.


1) What happened in April?

The prolonged financial crisis and increasing socioeconomic circumstances have given cryptocurrency a boost in 2023.

Recession fears heightened as the US economy grew at a pitiful 1.1% annualized pace in the first quarter, much below the 2% predicted. Inflation kept hurting the economy as the personal consumption expenditures price index rose by 4.2% in the first quarter.

Recent study from Blockdata has shown that many well-known organizations regard blockchain technology as having enormous potential and have already started integrating it into their company processes. In reality, blockchain technology is presently being used in some form by 44 of the top 100 public corporations according to market valuation.

The telecom, technology, and media sector, which includes major players like Verizon, Meta, Adobe, and many more, ranks first for blockchain adoption. These businesses make up 36% of the leading blockchain users at the moment. Securing transactions is one of the primary uses of blockchain in this sector. Blockchains can offer a safe and impenetrable transaction log that can be checked by other companies and regular customers, preventing both mistakes and fraud. The use of blockchain technology in supply chain management is also becoming increasingly common.

The consumer and retail sector, which includes 20% of the top 100 blockchain-using enterprises, is in second position. Star-studded companies like Nike, Walmart, Starbucks, and (obviously) Tesla are on the list. Companies in the consumer and retail sectors are utilizing blockchain technology to a significant extent to enhance their supply chain operations, similarly to but probably even more so than the telecoms sector. It already helps with inventory management, supply chain transparency, and offers reliable, secure monitoring of transported items that cannot be tampered with.

Rewards systems, from Venmo’s monthly crypto cashback rewards system to Starbucks’ wildly famous NFT loyalty program, are an intriguing application of blockchain that is exclusive to this sector. With the aim of enhancing the customer experience and boosting customer loyalty, these businesses are utilizing blockchain to track rewards points and ensure that they are accurately spent.

Blockchain is also being used by industry giants like PayPal, Honeywell, and Visa in practical ways. The basic materials and industrials category, which accounts for 20% of the top 100 blockchain-implementing enterprises, is the last industry on our list and includes these businesses. Payment firms may use blockchains to speed up transactions and invoicing procedures between businesses and users, in addition to employing them to build inventory systems and track shipments. They can even handle payments automatically and without the use of middlemen while maintaining security and integrity.

The remaining sectors using blockchain technology include the banking sector (11%, including J.P. Morgan and China Construction Bank), the energy and utilities sector (9%), and the healthcare sector (2%).

2) Where do we stand?

The Markets in Crypto-Assets Act, or MiCA, was finally put to a vote by the European Parliament after two delays. The measure, which was initially submitted in 2020, must now receive approval from the European Council in order to become a law. After the vote on April 20, Stefan Verger, a member of the European Parliament and the report’s author, referred to MiCA as “A milestone for the crypto asset industry.

With MiCA, European authorities hope to create uniform standards and harmonized laws for digital assets at the EU level, giving the sector’s participants and investors legal security. The rule would create standards for the management, organization, and governance of token issuers for digital assets. Additionally, it will provide guidelines for the disclosure and transparency standards for crypto issuance and trading. Chainalysis states that the particular MiCA regulations pertaining to stablecoins will go into effect in July 2024, while other provisions, such as those pertaining to suppliers of services for digital assets, would take effect in January 2025.

According to ARK Invest CEO Cathie Wood, recent instability in the financial industry has demonstrated that Bitcoin and Ether may weather a fragile economy, outperform other asset classes, and act like gold. The endurance of Bitcoin throughout the most recent banking crisis, according to Wood in an interview on April 15, has been “the most remarkable” of all the signs her tech-focused investment management business is keeping an eye on. In the midst of macroeconomic uncertainty, she asserted that Bitcoin and Ether are now serving as “risk-off” assets and as a “flight to safety” for investors.

When cryptocurrencies are more widely accepted and the public can more clearly see the types of regulatory pressure that the US government is applying on the industry to maintain centralized control of money and monetary policy, according to Wood, they will eventually become an “election issue.”

Not everyone agrees with Wood.

In an interview on April 12, Ray Dalio, the founder of Bridgewater Associates, the largest hedge fund in the world by assets under management, claimed that Bitcoin could not function as an “effective currency” because it is too erratic and that central banks won’t accept it.

Despite having previously called Bitcoin “one hell of an invention,” Dalio recently declared that he prefers to see the creation of a “inflation-linked” currency that would help to guarantee that customers would retain their purchasing power.

On Chain Data:

The top three performances overall among the top 10 largest cryptoassets have been Solana, BNB, and Dogecoin. Numerous favorable changes in the ecosystem and a sharp rise in derivatives open interest have supported Solana. While Dogecoin’s performance was boosted by excitement in the meme coin space following the launch of Pepe coin in April, BNB outperformed primarily as a result of the launch of Binance’s launchpool project and Sui farming.

We noticed a considerable increase in Altcoin outperformance relative to Bitcoin after the successful Ethereum Shapella update on April 12th, however that outperformance steadily declined until month’s conclusion. Only 10% of the tracked altcoins managed to outperform Bitcoin in April, compared to 45% just days after Ethereum’s upgrade. The Ethereum Shapella update served as the primary driver of the large increase in performance dispersion across cryptoassets throughout the month of April. A rise in dispersion indicates that coin-specific variables, rather than systematic ones, are more responsible for the performance of cryptoassets.

The fact that US sovereign risks have continued to rise as the debt ceiling deadline approaches was one of the key macro issues. The US Treasury is expected to run out of money by July this year, which may cause a technical default if the US were to forget to make a coupon or maturity payment on its debt. The Treasury General Account (TGA) at the Fed has around 166.5 billion dollars remaining as of this writing, although it has been losing about 64 billion dollars each month this year.

Additionally, because of this, traders have begun raising the price of US credit default insurance. The US 1-year CDS had grown to 177 bps at the time of writing, which is the highest reading ever. Inferring a default probability of 2.95% in a year from a CDS rate of 177 bps under the hypothetical default recovery rate of 40%. The US 1-year CDS as well as the 5-year CDS have started to grow extremely quickly, but this is still at a low level.

Concerns over the US Dollar and the possibility of “De-Dollarization,” or the strategic divesting out of Dollar-denominated assets by foreign firms and sovereigns, are growing in this scenario.

The BRICS countries’ political decisions to denominate bilateral commerce in currencies other than the US Dollar and the fact that recent central bank gold purchases were at their highest level since 1967 generally reinforced the De-Dollarization thesis. Among participants in the traditional financial markets, gold is still regarded as the “anti-Dollar”.

De-dollarization, on the other hand, is a structural process that takes years to complete. Nevertheless, a change in US monetary policy and structurally higher interest rates in Europe and other regions could lead to a structural outflow of foreign equity and bond portfolios from the US, which could hasten the process of de-dollarization from a cyclical perspective as well.

What Could Happen?

Volatility in the cryptocurrency markets looks to be caused by JP Morgan’s acquisition of First Republic Bank. Does the second-largest US bank collapse ever show that the crisis is worsening (there’s a narrative that this would be good for crypto) or does it show that things are stabilizing since the financial sector has effectively handled the challenge? There is still a lack of clarity, and there are many additional obstacles facing cryptocurrencies, such as the US regulatory crackdown and this week’s 25-basis-point increase in interest rates.

Our “long term thesis” according to analyst Nicholas Merton is that we “are still in a bear market and that this is an exacerbated relief rally of around 100% from those relative lows.” Long-term, according to Bloomberg Intelligence analyst Mike McGlone, he is “very bullish” on Bitcoin, but is concerned that “a rug pull in the stock market” might drive values below $20,000. The price of Bitcoin at the time of writing was about $28,000, down 4.7% over the previous day but up 2% over the previous week. A week ago, Ethereum was trading at $1,830, down 3.6% in 24 hours. XRP, Cardano, and Dogecoin all had flat prices, while Polyon dropped by 3.1%. 63 represents Greed on the Crypto Fear and Greed Index.

JP Morgan, a major financial institution, intervened to buy the failing First Republic Bank’s assets. The good news is that no one is attributing depositors leaving the bank and the share price plummeting to cryptocurrency. Wall Street is becoming more confident, according to Oanda analyst Edward Moya, that the risk associated with broader banking has been “removed from the table.” It appears like the American financial system is prepared to handle the next banking crisis when it occurs, which, he continued, “dampens the case for cryptocurrencies.” However, Bob Michele, CIO at JP Morgan Asset Management, asserted that the country is still in a “crisis” and expressed concern that regional banks may be supported by government loan programs.

According to its chairman Patrick McHenry, the US House Financial Services Committee is attempting to present a draft of comprehensive crypto legislation. Within a year, he said, President Joe Biden might sign a law. While previous attempts to regulate cryptocurrency have failed, the recent adoption of MICA laws in Europe and Hong Kong may finally reignite the debate. Comments on a consultation for a thorough regulatory framework for UK crypto assets are no longer being accepted. The larger players, including Polygon, a16z, and numerous digital assets organisations, mostly praised some of the plans and demanded that others be improved.

According to early indications, the top five cryptocurrencies tracked by investors in May 2023 will be PEPE, RNDR, EGLD, VET, and STX. If all goes according to plan, the cryptocurrencies might offer remarkable profits in the upcoming month.

The variables influencing the price development of the cryptocurrencies listed above might be different in a number of ways. However, the growth of altcoins, particularly those of new projects, is proving to be significantly predicted by their listing on the top crypto exchanges.

Disclaimer: All material in this market study, including the thoughts and opinions expressed in it, has been supplied in good faith. Readers must conduct their own due diligence and research. The reader solely assumes all risk for whatever action they may take.


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