ARP's Crypto Digest

General Digital Asset Market View:

BTC’s volatility this week aligns with ETF data showing consistent net outflows from spot Bitcoin ETFs: $60.7M on February 18, $64.1M on February 19, $364.8M on February 20, and $62.9M on February 21. Major funds like Fidelity, Ark, VanEck, and Grayscale were net sellers, with Grayscale contributing a $60.1M outflow on February 21, marking four consecutive days of negative flows.

These sustained outflows have had a negative impact on BTC’s price.
While the absence of notable flows from BlackRock creates some uncertainty, the consistent selling by key players has weighed on BTC’s price rather than supporting growth this week.

Macro:

The German federal election, and the implications in the aftermath, will be the key event to watch this week. From a data POV, the secondary reading of US Q4 GDP will be in focus alongside January’s PCE release on Friday. The Conference Board’s consumer confidence survey will also be important. Elsewhere, we have inflation data in Europe and Tokyo and GDP releases in Switzerland, Canada and India. China’s NBS PMIs and Korean trade data will conclude the week. From a monetary policy POV, the BOK (25bp cut) and BOT (no change) both meet and the ECB’s January meeting minutes will also be released. Elsewhere, there is a Cameco conference worth keeping an eye on and Amazon’s February Product Event. Hynix and NextEra both go ex-div.

More Crypto:

CME’s basis has fallen off a cliff this week.

Lethargic and risk-averse conditions are present across the board. Trading volumes are at pre-election levels, there are no material ETF flows, and volatility is low.

Capital inflows are weakening, and derivatives activity is slowing down, posing risks for BTC.

The key level to watch is the short-term holder’s cost basis at $92,500, where many investors may start seeing unrealized losses. If panic escalates, this could drive prices lower, but with consolidation nearing its final stages, the market seems poised for a decisive move.

What Happened This Week:

• Canary Litecoin ETF listed on the Depository Trust and Clearing Corporation (DTCC) system under the ticker $LTCC.

• FTX has begun repaying funds to customers with account balances of $50K or less. FTX also announced that repayments to customers over $50K will begin on May 30th.

• JP Morgan has acquired an additional $100M of MicroStrategy shares $MSTR in Q4.

• U.S. Senator Cynthia Lummis has called for the U.S. Strategic Reserve to be upgraded to utilize Bitcoin.

• North Korea’s Lazarus Group responsible for ByBit hack resulting in losses of over $1.5 billion.

What to Look Out For:

• Journalist Eleanor Terrett reported that sources told her that the SEC has requested information from the industry about the different types of staking and their benefits, and that the SEC may soon issue guidance on staking.

• The SEC has launched the Cyber and Emerging Technologies Unit (CETU), replacing the Crypto Assets and Cyber Unit, to combat fraud in AI, blockchain, and crypto while ensuring cybersecurity compliance.

• Monad has announced that its testnet will launch on February 19. The mainnet is expected to go live in Q2.

What we enjoyed reading and listening to:

• ByBit Hack Incident: Overview and Reflections — Link

• Lazarus Group — Link

• Sentiment is Low, Market is High — Link

• Argentinian President Javier Milei charged with fraud over $LIBRA token scandal — Link

• The Rise of Stablecoins — What Are They, and How Do They Work? — Link

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