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THE WEEKLY UPDATE
WEEK 45 Want to sponsor this report?
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The Weekly Update
Market Update
1 ▪ Bitcoin continues to impress and almost touched $16,000 last
week. The rest of the crypto market is also seeing massive
returns at the moment and the market sentiment is at historical
high levels.
▪ The bitcoin spot volume has increased more than 270% over
the past month and is now at the highest level seen in 2020.
▪ The open interest on CME has surged lately and is nearing $1 3,500
Real BTC Daily Volume (7-day average)
billion. The number of large traders on CME has more than
doubled this year. Another sign of increased institutional
demand for bitcoin.
3,000
Valuation 2,500
Trading Volume ($ million)
2 ▪ Bitcoin saw another yearly high last week, very close to
+270%
$16,000. What’s next? A flip of $16k could take us towards the
all-time high levels of December 2017. 2,000
▪ The aggregated funding rates on the perpetual BTC contracts
have seen a sharp rise over the weekend as traders are turning
more bullish and seeking more exposure to the upside. 1,500
1,000
Blockchain Activity
3 ▪ The last 6 months have seen a sharp decline of BTC on
500
exchanges as the aggregated BTC exchange balance has fallen
by 560,000 BTC since March 15th.
▪ The Ethereum Foundation recently informed that the first
0
phase of ETH 2.0 is set to launch on Dec 1st. But, 16,384
Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20
validators staking more than 32 ETH are required to trigger the
launch. Below 10% of the required staking deposits have been
reached as of now.
THE NEWSROOM
Billionaire Investor Stanley Druckenmiller: JPMorgan Report : Family Offices May Q3 Earnings: Square Reports Over $1B in
Bitcoin Better Bet than Gold Now See Bitcoin as Alternative to Gold Quarterly Bitcoin Revenue for First Time
Once confused by bitcoin, Stanley Druckenmiller's now The Grayscale Bitcoin Trust is outperforming gold It was a monster quarter for Square’s bitcoin business.
an investor. Druckenmiller, a billionaire investor who exchange-traded funds (ETFs), a trend perhaps driven by “Cash App generated $1.63 billion of bitcoin revenue and
managed George Soros's money back in the 1990s, institutional investors like family offices, according to a $32 million of bitcoin gross profit during the third
yesterday sang the praises of bitcoin. report by JPMorgan analysts that CoinDesk has obtained. quarter of 2020, up approximately 11x and 15x year over
year, respectively,” the publicly traded payments firm
wrote in its Q3 investor letter published Thursday at the
market close.
Nov 10, 2020 3
Bullish momentum in the crypto market
Bitcoin Correlation:
ETH XRP GOLD S&P500
90-day correlation
▪ Bitcoin continues to impress and almost touched $16,000 last week and (weekly change included)
marked another 2020 high.
BTC 0.714 -0.057 0.772 -0.040 0.148 -0.023 0.386 0.025
▪ The rest of the crypto market is also seeing massive returns at the moment Source: Coinmetrics.io
and ETH is up almost 20% over the past week.
Top 3: Percentage Change in Price Over the Last Week
▪ DeFi tokens are back alive after two terrible months and topping the list
over the best performers this week. If bitcoin starts ranging here, we could
potentially get a much-anticipated boost for many altcoins.
▪ The stock market started the week with strong gains as positive news on a
Covid-19 vaccine made headlines globally. Interestingly, bitcoin did not follow
stocks but dropped down together with gold. 18.5% $448.1
13.0% $15,301
Best Performing Price Last week Last month YTD
Aave 59.650 110.80% 16.05% 13% 10.5% $0.257
yearn.finance 17054.9 74.95% 1.38% 1435%
Synthetix Network Token 4.4 70.50% 3.90% 555%
Worst Performing Price Last week Last month YTD
Crypto.com Coin 0.071 -10.06% -54.97% 108%
Algorand 0.218 -5.18% 11.28% 22%
Monero 117.220 -1.34% -6.04% 151%
Last week of top 50 by market capitalization
Source: cryptowat.ch, messari.io Source: Digital Assets Data
Nov 10, 2020 4
Strong start of November for all indexes
Percentage of Total Market Capitalization
BTC ETH BCH LTC XRP DASH NEM XMR IOTA NEO
Market
63.13% 11.34% 1.07% 0.86% 2.62% 0.14% 0.25% 0.45% 0.16% 0.24%
Share
Weekly
0.11% 0.60% -0.06% 0.06% -0.03% -0.02% 0.03% -0.08% -0.01% -0.02%
While bitcoin was dominating in October, altcoins are now back Change*
alive. The first week of November has seen DeFi tokens waking up * Weekly change in percentage points
Source: Coinpaprika.com
again, but will it last?
Monthly Performance of Market Capitalization Weighted Indexes
▪ Bitcoin has continued the strong uptrend from October and is
currently up 12% after the first 10 days of November. 12%
12%
▪ While the Large Caps Index was the only one that followed bitcoin
10%
last month, Small Caps is back where we’re used to see it. The Small
Caps Index is finally back in the green and is leading the way this
month after some heavy gains over the past week.
▪ Many DeFi tokens have clearly seen a momentum shift in November 3%
and traders are already calling the bottom of the two-month long
decline after the intense DeFi hype this summer.
▪ Mid Caps is the worst performer so far this month, and is not
keeping up with the others at the moment – currently up 3%.
Source: Digital Assets Data, Bletchleyindexes.com
Nov 10, 2020 5
Extreme greed in the market
Sentiment getting close to all-time high
The Fear and Greed Index pushed above 90 last week and is currently at the highest levels seen since the index was launched in the beginning of 2018. We have only been higher one time,
during the absolute peak last summer. As emphasized many times already this year, this is not a level we stay at for a long time and has historically been a good time to take some profit.
Extreme Greed
Fear & Greed Index
ATH:95
90
90
Now Last week Last month
Extreme Fear Extreme Greed
Greed (71) Greed (53)
(90)
Source: Alternative.me, Digital Assets Data
Nov 10, 2020 6Bitcoin volume to new 2020 highs
After a strong week for bitcoin, the 7-day average daily real bitcoin volume* has now pushed above the previous highs from 2020 and is at a
yearly high. The daily volume on Thursday last week was the highest since the brutal crash in March, and the volume has stayed high over the past
few days as well. This made the 7-day average go up to new highs this week. The bitcoin volume is up more than 270% over the past month.
3,500 Real BTC Daily Volume (7-day average)
3,000
Trading Volume ($ million)
2,500
2,000 +270%
1,500
1,000
500
0
Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20
Source: Messari, Skew *as defined by Arcane Research. Read more here.
Nov 10, 2020 7Large spike in volatility
The first double-digit percentage since July certainty resulted in a large spike in volatility last week. The 7-day volatility is now at 4.6%, the highest in two months. This
week has begun with massive moves across global markets as well, and we could be in for yet another eventful week in the crypto market.
Daily Return
15%
30-Day Volatility
7-Day Volatility
10%
5%
4.58%
2.91%
0%
-5%
-10%
BTC-USD Volatility
1 Jan 29 Jan 26 Feb 25 Mar 22 Apr 20 May 17 Jun 15 Jul 12 Aug 9 Sep 7 Oct 4 Nov
Source: cryptowat.ch, Coinbase
Nov 10, 2020 8Election week rally
Bitcoin and stocks moved together on election day
Election Week 2020: Bitcoin vs. S&P 500
17%
Last week, we looked at the movements of
bitcoin and the stock market during the
15%
2016 election week. As the 2020 election
Bitcoin 14%
week is finally behind us, we now look back
at bitcoin and S&P 500, and how they 13%
behaved last week.
11%
▪ Election day was bumpy 4 years ago, and
we also got some interesting movements
9%
this year.
S&P500
▪ As seen many times this year, bitcoin and 7%
Futures 7%
S&P 500 moved hand in hand on election Election Day
day. 5%
▪ However, bitcoin really picked up the pace
after election day and increased more than 3%
15% in less than two days.
1%
▪ The stock market ended the week more or
less equaly as in 2016, with a strong gain of
-1%
more than 5%.
-3%
30 Oct 2 Nov 3 Nov 4 Nov 5 Nov
Source: Tradingview, Bitstamp, Oanda S&P500 Futures Bitcoin
Nov 10, 2020 9Open interest of CME’s BTC futures approaching all-time high
The open interest on CME has surged lately and is nearing $1
billion once again.
BTC Futures: CME
▪ The open interest of CME’s BTC futures grew sharply during $1,000m
the summer and peaked at $948 million on August 17th.
$900m
▪ Following the August 17th top the open interest quickly fell,
and by October 3rd, the open interest had decreased by 64% $800m
to $344 million.
$700m
▪ However, since the bottom of October 3rd,
the pendulum has
shifted again as open interest has risen considerably to its $600m
current levels of around $900 million.
Open interest
$500m
▪ The open interest is currently just below the highs of August,
and we are once again on path to surpass the $1 billion $400m
milestone.
$300m
▪ The growth on CME has been accompanied by renowned
macro investors going long bitcoin as an inflation hedge, first $200m
Paul Tudor Jones, and now Stanley Druckenmiller.
$100m
"It has a lot of attraction as a store of value ... If the gold bet works
$0m
the bitcoin bet works better because it's thinner, and more illiquid
and has a lot more beta.“ Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20
Source: Skew
- Stanley Druckenmiller, CNBC November 9th, 2020.
Nov 10, 2020 10More large bitcoin traders on CME this year
Currently at new highs
Bitcoin Futures: Large Traders* on CME
120
There is currently a record-amount of money flowing into
CME’s bitcoin futures contracts. One of the main drivers of the
increase in open interest could be the number of large traders,
which has been accelerating this year. 100 99
▪ Reports from the Commodity Futures Trading Commission
(CFTC) show that almost 100 large traders holds the bitcoin
contracts on CME. 80
▪ Large traders hold at least 5 futures contracts, equaling a
minimum of 25 BTC (5 BTC per contract).
60
▪ The average in 2019 was 45 large traders without any notable
growth throughout the year. However, this number has more
doubled in 2020 and we saw a new record of 102 large traders
two weeks ago. 40
▪ This is perhaps one of the best indications of increased
institutional demand for bitcoin exposure and we already know
that investors like Paul Tudor Jones is a part of this growing 20
group on CME, currently the second largest futures market for
bitcoin.
0
Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20 Jul 20 Oct 20
Source: CFTC *Large Traders hold at least 5 contracts (25 BTC)
Nov 10, 2020 11VALUATION
Bitcoin approaching $16,000 – What’s next?
Bitcoin / U. S. Dollar, 1w, Coinbase
Bitcoin just keeps on giving, and almost
touched $16,000 last week after another
strong performance. What levels should
investors look out for now?
▪ The bitcoin price is currently ranging
between $15k-$16k. A flip of the $16k
level on a weekly basis would be very
bullish and take us towards the all-time
high levels of December 2017
▪ Another failed attempt to break $16k
could potentially see the price cool of a
bit, and likely take us down to the $14k
level again.
▪ This would not necessarily be bearish,
as pullbacks are common in bull
markets. However, continuation lower
towards the $12k level could
potentially mean that the top is in for
2020.
Source: Tradingview, Coinbase
Nov 10, 2020 13Bitcoin futures premiums are climbing again
BTC December 2020 Futures Contracts - Annualized Premium Rates (Historically)
20%
The premiums rates of the BTC futures contracts are
climbing again this week, after an impressive week by
bitcoin. 16%
▪ Both CME and the retail-focused platforms are
now back above their average premium rates 12%
on the December contracts. 11.74%
▪ CME is still ahead of other platforms, as
institutional traders are willing to pay a higher 8% 7.75%
premium for their bitcoin exposure at the
moment.
4%
▪ The average premium of the retail-focused
platforms is at the highest level since the
beginning of September and clearly shows that
more traders are anticipating more upside for 0%
bitcoin.
CME
Premium Rates for BTC Futures Contracts -4% Other platforms
December 2020 March 2021 Average CME
CME 1.47% 2.86% Average Others
-8%
Other platforms 0.97% 2.68% 11 Aug 25 Aug 8 Sep 22 Sep 6 Oct 20 Oct 3 Nov
Source: CME, Bitmex, Deribit, FTX, Kraken Other platforms: Average of Bitmex, Deribit, FTX & Kraken
Nov 10, 2020 14Sharp rise for bitcoin funding rates
Beware of traders turning exuberant
Funding Rate vs BTC
The aggregated funding rates on the perpetual BTC
contracts have seen a sharp rise over the weekend as
traders are turning more bullish.
▪ During August the funding rates soared as traders turned
bullish and the prices of the perpetuals prevailed above
the spot market.
Aggregated funding rate*
▪ As bitcoin went through a correction in September, the
BTCUSD
funding rates normalized in the neutral area, at around
0% to 0.01%.
▪ The funding rates remained around the neutral area
during the first stages of bitcoin’s strong October month,
but as the price blew past $14 000, the funding rates
once again climbed sharply.
▪ The funding rate is a great indicator of the sentiment in
the market, and high funding rates could imply that we
are in a state of exuberance and that bitcoin is prone for
a correction, or a sustained period of ranging.
Source: Digital Assets Data *Aggregated funding rate from BitMEX, Binance, Deribit and FTX
Nov 10, 2020 15BLOCKCHAIN ACTIVITY
Bitcoin exchange balance on the decline
Exchange Balances
Net outflow, Mar 15th-Nov 5th
The last half year has seen a sharp decline of the bitcoin 3.1
balances on exchanges 560,428 BTC
Millions of BTC on exchanges
3
▪ The BTC balances at major exchanges have fallen by 2.9
more than 560,000 BTC (19%) since March 15th.
2.8
2.7
▪ The aggregated exchange balance has just fallen below
2.4 million BTC for the first time since August 2018. 2.6
2.5
▪ Since August 2018, the circulating BTC supply has
increased by 1.3m BTC. Therefore, another interesting 2.4
metric would be the percentage share of BTC deposits 2.3
on exchanges compared to the circulating BTC supply.
Jul 18 Oct 18 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20 Jul 20 Oct 20
▪ By this metric, the exchange balance is currently
at its lowest since February 4th 2018. 17% Share of BTC supply on exchanges Feb 11th 2020
16.32%
▪ Despite BTC's strong price action over the last couple of 16%
months, the trend seems to be that hodlers are moving
their funds away from exchanges. In other words, BTC 15%
hodlers are seemingly not preparing to sell. Feb 4th, 2018
12.88% Nov 5th, 2020
12.93%
▪ Where the coins have moved are difficult to state with 14%
confidence, but it is likely that some have been moved
to cold storage, while some have ended up on 13%
Ethereum, and other have moved to yield providing
platforms like BlockFi.
12%
▪ Also, fast growing exchanges such as FTX are not
included in this metric, so it could be that the metric is 11%
understating the aggregated exchange balance.
Jan 18 Apr 18 Jul 18 Oct 18 Jan 19 Apr 19 Jul 19 Oct 19 Jan 20 Apr 20 Jul 20 Oct 20
Source: Glassnode
Nov 10, 2020 Data provided byPhase 0 of ETH 2.0 coming up in December
16,384 validators staking more than 32 ETH are required to trigger the launch
▪ On November 4th, the Ethereum Foundation informed ETH 2.0 Deposits
that the first version of ETH 2.0 is set to launch on
December 1st. 60,000 ETH Balance 10%
Progress to trigger launch
9%
▪ ETH 2.0 will move Ethereum over to a proof-of-stake
consensus mechanism, allowing Ethereum holders to 50,000
stake their coins to run the network, instead of mining 8%
blocks as is currently the case.
7%
40,000
Progress to trigger launch
ETH staked in deposit contract
▪ To trigger the launch of ETH 2.0, the network requires
6%
16,384 validators participating in staking.
30,000 5%
▪ A participant needs to stake 32 ETH into the deposit
contract, meaning that the launch requires a total of 4%
524,888 ETH to be staked in the contract prior to
December 1st. 20,000
3%
▪ Currently 50,322 ETH has been staked in the deposit 2%
contract. 10,000
1%
▪ That’s 9.6% of the required amount to trigger the launch,
and 473,956 more ETH is needed to launch ETH 2.0. 0 0%
4 Nov 5 Nov 6 Nov 7 Nov 8 Nov 9 Nov
▪ Up until December 1st a daily growth of 31,597 staked
ETH is needed for the genesis to be triggered.
Data provided by
Nov 10, 2020Almost 130,000 wallets ready for Ethereum staking
Ethereum Wallets with >32 ETH
135,000
Wallets must hold more than 32 ETH to participate in staking and
to operate as validators when Ethereum 2.0 goes live.
▪ Data from Nansen shows that almost 130,000 Ethereum wallets 130,000 128,997 wallets
are ready for staking. This number has grown by 15% this year
and has accelerated over the past month.
▪ That is just 0.26% of all non-zero Ethereum balances. There is no 125,000
1:1 relationship between humans and wallets, so it is challenging
to define how many people that are actually ready for staking.
▪ But, as highlighted on the previous slide, there must be at least
120,000
16,384 “32 ETH validator deposits” prior to December 1 to
trigger the staking deployment and the launch of Phase 0 for ETH
2.0.
▪ With almost 130,000 wallets currently holding 32 ETH or more, 115,000
this should be a very doable requirement of the community to
back the launch.
110,000
Jan 20 Mar 20 May 20 Jul 20 Sep 20 Nov 20
Data provided by
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Nov 10, 2020 20Disclaimer
• The Weekly Update (the “Report”) by Arcane Research is a report focusing on cryptocurrencies, open blockchains and fintech. Information published in the Report aims to spread knowledge and summarise developments in
the cryptocurrency market.
• The information contained in this Report, and any information linked through the items contained herein, is for informational purposes only and is not intended to provide sufficient information to form the basis for an
investment decision nor the formation of an investment strategy.
• This Report shall not constitute and should not be construed as financial advice, a recommendation for entering into financial transactions/investments, or investment advice, or as a recommendation to engage in investment
transactions. You should seek additional information regarding the merits and risks of investing in any cryptocurrency or digital asset before deciding to purchase or sell any such instruments.
• Cryptocurrencies and digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high risk tolerance. Investors in digital assets could lose the entire value of their investment.
• Information contained within the Report is based on sources considered to be reliable, but is not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of the date of
publication and are subject to change without notice.
• The information contained in this Report may include or incorporate by reference forward-looking statements, which would include any statements that are not statements of historical fact. No representations or warranties
are made as to the accuracy of these forward-looking statements. Any data, charts or analysis herein should not be taken as an indication or guarantee of any future performance.
• Neither Arcane Research nor Arcane Crypto AS provides tax, legal, investment, or accounting advice and this report should not be considered as such. This Report is not intended to provide, and should not be relied on for,
tax, legal, investment or accounting advice. Tax laws and regulations are complex and subject to change. To understand the risks you are exposed to, we recommend that you perform your own analysis and seek advice from
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