after the GENIUS Act vote at ~2pm today, 30 hours of floor debate kicked off on stablecoins in the senate..

all day it’s been a parade of democrats criticizing the bill for enabling “trump’s crypto corruption”

but this is political theater that is intentionally misleading 👇 the GENIUS Act creates a comprehensive legal and regulatory regime for stablecoins where (crucially) NONE currently exists

current stablecoins ($250bn market) have almost zero regulation in the U.S.

you (yes, YOU 👊🏻) could probably launch a stablecoin in the U.S. today with mostly no rules

BITCOIN MINING IS A GIANT "CRYPTO X AI" OPPORTUNITY

@glxyresearch just published a whitepaper explaining:
- the size/growth of AI/HPC market 📈
- why miners like @galaxyhq are working on AI 🔌
- what types of miners can capitalize 💰
- impact on future of bitcoin mining ⛏️

🧵 all the data in this thread comes from this great report from @SimritDhinsa and @OrejasSebastian from @galaxyhq mining and @hiroto_btc from @glxyresearch galaxy.com/insights/resea…

BITCOIN'S ROAD TO $100K - TEAR DOWN THIS WALL

this is a private research note sent to clients and counterparties of @galaxyhq. trade or invest with us to receive it directly.

Bitcoin has not traded below $90k for the last week and anticipation that the world’s oldest cryptocurrency will pass the $100k milestone has been building for weeks. Bitcoin had risen as much as 50% from the day before the U.S. election on Nov. 4. After setting new all-time highs of $99,860 on Friday, Nov. 24, BTCUSD has traded down as much as 8% to $91,420. In earlier Bitcoin times, this drawdown wouldn’t have raised eyebrows, as sharp corrections were extremely common. These days, however, all eyes are on Bitcoin, including many that have not been in the trenches of Bitcoin volatility for years.

Corrections are healthy, and as I wrote on Mar. 6, 2024, bull markets climb a “wall of worry.” (x.com/intangiblecoin…) Just 8 days later, on Mar. 14, 2024, BTCUSD reached $73,835, an all-time high that would not be surpassed until Nov. 6, 2024, the day after the U.S. presidential election (or more accurately, the early hours of the morning). Between those dates, BTC chopped in downward range for 237 days, or 7 months and 23 days, forming one of the biggest and longest-to-resolve bull flags I’ve ever seen. Those almost-8 months were volatile, with Bitcoin ranging between the $73,835 all-time high and $49,005, with peak to trough being a 40% drawdown.

For a variety of reasons, we believe the Bitcoin bull market has legs. There will be corrections and hiccups, which is normal. There could even some twilight regulatory or law enforcement actions from the outgoing Biden administration that jitter markets. But a combination of increasing institutional, corporate, and potentially nation-state adoption, a new U.S. administration that is shaping up to be extremely pro-Bitcoin, and solid positioning and network data all point to higher over the near and medium term.

Important questions I cover in this note:
· What is the current state of bitcoin supply and network fundamentals?
· Who is selling and why?
· What does leverage look like in the system?
· When might Bitcoin resume its march to $100k?

History of Drawdowns
In prior bear markets, such as in 2012, 2015-2016, and 2019, BTCUSD traded lower than -80% from its prior all-time highs. March 2020 and late 2022/early 2023 saw Bitcoin drop to -75% of its prior all-time high. Despite Bitcoin’s meteoric rise over the past 15 years, bear markets have historically been severe.

However, Bitcoin’s -8% dip over the last week barely rates when compared to the volatility during the 237 days of downward channel chop between Mar. 14, 2024 and Nov. 6, 2024. The 2017 bull market, which saw Bitcoin rise 20x in 12 months, experienced many significant drawdowns on the path to its Dec. 17, 2017 all-time high of $19,891. As I was involved at the time, the 40% correction around Labor Day 2017 was particularly grueling. This happened a month after SegWit activated on Bitcoin and Bitcoin Cash forked off, and there was real fear and questions at that time that BCH would “win” against Bitcoin (Narrator: it did not).

[2017 drawdowns image in next post]

2021 was no different, though at a higher market cap and with more liquidity, the drawdowns were less intense than in 2017. Still, starting from the COVID low on Mar. 12, 2020, BTCUSD experienced at least 16 drawdowns of 10% or more and 7 drawdowns of 15% or more.

[2020 drawdowns image in next post]

Lastly, comparing this week’s 9% drawdown in BTCUSD to the rest of 2024, there were at least 7 bigger drawdowns during the chop between Mar. 14, 2024 and Nov. 1, 2024.

Supply Distribution

We can look at onchain data to gain information about selling pressure. A common metric for analyzing coin movements is the statistical grouping of “long term holders” (“LTH,” those who have not moved coins for 155 days or more) and “short term holders” (155 days or less). This chart has been widely circulated and shows that the supply held by LTH has been declining as BTCUSD has risen post-election. In fact, LTH positioning has declined more in the last couple weeks since the profit taking that capped the run to all-time highs in March.

[LTH supply change image in next post]

This doesn’t tell the whole story, though. Before the new all-time highs were reached in the last couple weeks, it had been 237 days since the prior all-time high in March 2024. LTH supply includes both any holder with coins older than 155 days, as well as truly long-term holders like those who bought last year, or 5 years ago, or 10 years ago. We can observe through onchain data that truly long-term holders are not stepping in here to take profits, but instead that it’s more recent LTH supply taking profits.

First, Coin Days Destroyed (CDD) is not spiking in any material way, indicating that very old coins are not moving onchain at scales seen during other topping events. (Note, the spike in mid-2024, the largest reading ever for the metric, was due to distributions from the Mt. Gox estate, while the early 2022 spike was due to the U.S. government recovering – and moving – coins stolen from Bitfinex).

[CDD image in next post]

If “long term holder” supply is declining but very old coins aren’t moving, who is moving and selling coins? First I need to explain the UTXO realized price distribution (URPD) metric, which groups the existing supply of coins based on when they were last moved onchain. Observing Bitcoin’s supply by the price the coins were created onchain shows the levels of concentrated ownership and gives an idea of different pockets of cost basis. Recall that Bitcoin uses an “unspent transaction output” model (UTXO) for accounting, not an account-based model (as other chains like Ethereum and Solana use). When a user spends (or sends) Bitcoin, the coins used in the transaction are “destroyed” and new coins (unspent transaction outputs) are created. The chart below (also known as “URPD”) shows the price at which all current UTXOs were created and highlights significant ownership of coins last moved between $52k and $72k (the 237 days of chop from March until November), which should be an area of strong support if BTCUSD goes that low. However, this would represent a full retrace of the post-election bump, which is extremely unlikely. That being said, below $87k there is a big pocket of sparse ownership in which all buyers since November 11 would be underwater.

[URPD image in next post]

Analyzing the same data based on change in supply at the different price bands gives an idea of where the sell pressure is coming from. Comparing the change in URPD distribution by price between November 1 and November 25, we can see that most of the coin movements have involved coins that were created (UTXOs created, i.e., last moved onchain) between $56k and $72k, or peak “chop” from the March to November period. Just as the Coin Days Destroyed metric suggests, very few very old coins are moving on chain. Rather than whales from eons ago dumping coins, the sell pressure appears to be coming primarily from 2024 buyers taking profits off the back of this move towards $100k.

[URPD supply diff image in next post]

Options Market Positioning

Open interest for the new options on spot-based Bitcoin ETFs totals more than $4.1bn of notional, with the majority ($3.1bn) on call buying. Most call exposure is at strikes of $93k or higher ($2.7bn of the $3.1bn in call OI, or more than half of all the open interest, put or call). Note, options on the ETFs use the ETFs’ prices for strikes, but we transform the data in the chart below to show via equivalent BTCUSD price. Generally, the data suggests market participants are bullish and positioning for further upside.

Options markets paint a bullish picture. Based on our analysis using data from AmberData, crypto-native dealers are net short gamma at $93,000. At that level, dealers need to hedge $53m for every $1000 move – buying as price rises and selling as price declines. That negative gamma profile will amplify moves in either direction. Dealers are short gamma when they sell calls into the market. Until BTCUSD reaches $106k, dealers are net short gamma, meaning they contribute to the amplification of moves in either direction, which will increase volatility. Moves above $106k (or below $57k, not likely to occur) see dealers do the reverse, thereby dampening volatility. This profile changes with expiries and other market dynamics. Nonetheless, the market has approximately $20m in negative gamma up to $100k BTCUSD.

Looking at Leverage

There’s definitely leverage in the system, but in general it looks mostly healthy rather than excessive. Perpetual swap funding rates aren’t near the March 2024 levels, let alone the levels seen during the 2021 all-time high.

[Perp swap funding rates image in next post]

3 month annualized basis is increasing on the move since election day but remains well below March 2024 or other prior tops.

[basis image in next post]

Open interest is at all-time highs, but a huge portion of that is CME and likely related to ETF owners doing the basis trade or hedging by ETF authorized participants (APs). The data below is from Glassnode.

[open interest image in next post]

Tear Down This Wall

I’ve established that corrections are normal in bull runs and they are often severe. Even during the period between March and November of this year, BTCUSD experience 5 drawdowns of 15% or more. The question now is, when does the uptrend resume and what takes us there? While the global rates environment and money supply remain an important factor that could present a headwind for risk assets, the positive catalysts for bitcoin and crypto abound.

From my recent report “Entering the Digital Golden Era,” markets are expecting a litany of positive catalysts on the regulatory and policy front. Easing of regulatory headwinds combined with specific interpretive letters, no action letters, or regulatory guidance is likely to dramatically expand access to crypto for institutional investors in America.

- The easing of SAB 121 applicability by the SEC in September, or in the case of an outright withdraw of the guidance, will pave the way for the world’s largest custody banks to enter crypto. BNY Mellon achieved exemption from the onerous account guideline because its primary prudential regulator (NYDFS) did not object, but the OCC is the primary prudential regulator for national banks like Citigroup and JP Morgan. Given we are very likely to see a material shift in the OCC’s posture to banks interacting directly with cryptos, these big banks will eventually have their opportunity to get more involved.

- Further institutionalization will in turn increase financing options for crypto assets, make spot crypto more available through existing institutional trading platforms and relationships, and raise the maturity level of the institutional crypto market generally.
Relaxation of the SEC’s applicability of Howey to digital assets, or alternatively the expansion of “crypto asset securities” that can be traded inside broker/dealers, will allow more entrants into the exchange space, including perhaps traditional financial institutions like banks, exchanges, or brokerages. Additionally, such a relaxation of the SEC’s application of Howey could result in more spot-based crypto ETFs in the US.

- Clarity and permissiveness from regulators could allow traditional financial services companies and investors to operate onchain for the first time, bringing new opportunities for yield and other strategies.

- Expanded access to the public blockchain could also revolutionize trading efficiency, transparency, issuance, and other aspects of finance. Depending on regulatory posture and any legislation that is enacted, the merger of tradfi and defi may finally be upon us.

- Again, depending on the SEC’s stance on Howey and token disclosures, we could see a wave of new types of tokens, even possibly equity securities, and existing tokens may add more equity-like features to enhance their value propositions. An expanded and improving asset ecosystem will be supportive to the liquid crypto hedge fund industry whose investible universe will both mature and expand. Improved token disclosure and issuance capabilities in the US will finally challenge or even reverse the existing SAFT-to-low-float-high-FDV regime which favors VC capital over liquid.

- On the venture side, it’s possible that the IPO market will open more meaningfully to crypto-native companies, finally giving a pathway to realizing return on investments via exits. Today, the only venture-backed crypto startup to go public (other than a few SPACs) is Coinbase. By our estimation, there could be dozens of crypto firms looking to go public in the US if the conditions were right and the regulators were open.

Scott Bessent, a known advocate for Bitcoin and crypto, was recently chosen to be the 79th Treasury Secretary, marking the latest in a swath of pro-Bitcoin cabinet officials. VP-elect J.D. Vance owns Bitcoin, Elon Musk and Vivek Ramaswamy (who will run the new Department of Government Efficiency) both own Bitcoin, Commerce Secretary nominee Howard Lutnick owns “shedloads” of Bitcoin and his company Cantor Fitzgerald is deep in both Bitcoin and stablecoin markets, and the Trump family all support digital assets. Fox Business reported today that the Trump transition team is planning for the CFTC to take the leading role in digital assets regulation (versus the SEC), which is seen by observers as favorable to the industry.

Talk of a “Bitcoin strategic reserve” has been intensifying over the last few weeks, and given the chatter it’s likely that other nations will seek to front-run the U.S. with more permissive policies on digital assets if not a strategic reserve itself. Already, this week Morocco began preparing new legislation to legalize crypto after banning it in 2017. Bitcoin Inc. (which runs the massive annual Bitcoin conferences) is hosting Bitcoin MENA in Abu Dhabi Dec. 9 and 10, and it’s possible that event, like it’s Nashville cousin earlier this year, will feature some big adoption announcements. The introduction of Bitcoin ETF options could contribute to increased liquidity and potentially reduced volatility, making it easier for large institutions to enter the asset and also potentially spurring the interest of U.S. retail investors, who make up 44% of retail equity options.

All this to say that the setup for Bitcoin over the next 12 to 24 months appears unique and bullish. From policy to market structure, adoption to network fundamentals, there is strong reason to believe that BTC is heading higher in the near and medium terms. Once some leverage is flushed and shorter term buyers are done taking profits, we believe Bitcoin may find a strong base of support and could make another attempt to surpass the $100k level (the sell wall!) in the near term.

Alex Thorn
Head of Firmwide Research, Galaxy
New York, NY


Legal Disclosure:
This document, and the information contained herein, has been provided to you by Galaxy Digital Holdings LP and its affiliates (“Galaxy Digital”) solely for informational purposes. This document may not be reproduced or redistributed in whole or in part, in any format, without the express written approval of Galaxy Digital. Neither the information, nor any opinion contained in this document, constitutes an offer to buy or sell, or a solicitation of an offer to buy or sell, any advisory services, securities, futures, options or other financial instruments or to participate in any advisory services or trading strategy. Nothing contained in this document constitutes investment, legal or tax advice or is an endorsement of any of the stablecoins mentioned herein. You should make your own investigations and evaluations of the information herein. Any decisions based on information contained in this document are the sole responsibility of the reader. Certain statements in this document reflect Galaxy Digital’s views, estimates, opinions or predictions (which may be based on proprietary models and assumptions, including, in particular, Galaxy Digital’s views on the current and future market for certain digital assets), and there is no guarantee that these views, estimates, opinions or predictions are currently accurate or that they will be ultimately realized. To the extent these assumptions or models are not correct or circumstances change, the actual performance may vary substantially from, and be less than, the estimates included herein. None of Galaxy Digital nor any of its affiliates, shareholders, partners, members, directors, officers, management, employees or representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the information or any other information (whether communicated in written or oral form) transmitted or made available to you. Each of the aforementioned parties expressly disclaims any and all liability relating to or resulting from the use of this information. Certain information contained herein (including financial information) has been obtained from published and non-published sources. Such information has not been independently verified by Galaxy Digital and, Galaxy Digital, does not assume responsibility for the accuracy of such information. Affiliates of Galaxy Digital may have owned or may own investments in some of the digital assets and protocols discussed in this document. Except where otherwise indicated, the information in this document is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. This document provides links to other Websites that we think might be of interest to you. Please note that when you click on one of these links, you may be moving to a provider’s website that is not associated with Galaxy Digital. These linked sites and their providers are not controlled by us, and we are not responsible for the contents or the proper operation of any linked site. The inclusion of any link does not imply our endorsement or our adoption of the statements therein. We encourage you to read the terms of use and privacy statements of these linked sites as their policies may differ from ours. The foregoing does not constitute a “research report” as defined by FINRA Rule 2241 or a “debt research report” as defined by FINRA Rule 2242 and was not prepared by Galaxy Digital Partners LLC. For all inquiries, please email contact@galaxydigital.io. ©Copyright Galaxy Digital Holdings LP 2024. All rights reserved.

RAISING NEW CRYPTO VC FUNDS HARDER THAN EVER

last quarter, crypto VC fund managers saw experienced a challenging fundraising environment with the fewest new funds (8) raising the least money ($140m) since Q3 2020 🧵 all the data in this thread comes from our new quarterly VC report w/ @hiroto_btc read it here. note that fund data comes from galaxy research's visiontrack database. learn more visiontrack.galaxy.com galaxy.com/insights/resea…

NEW EVIDENCE THAT @KamalaHarris WILL CONTINUE CRYPTO CRACKDOWN

her advisor choices suggest she will keep biden’s hostile attitude to crypto

harris is working w/ brian deese & bharat ramamurti, 2 key anti-crypto officials from biden admin..

thread 🧵 we got some intel on the harris campaign’s current posture on economic policy, and who they are working with, from some bloomberg @business reporting this morning

deese and ramamurti are two key architects of the biden admin’s anti-crypto crusade, including chokepoint 2.0

creditors have been stuck in mt gox bankruptcy for 10+ yrs--finally trustee says in-kind distribution of #BTC #BCH will begin in july. we think fewer coins will be distributed than people think & that it will cause less #bitcoin sell pressure than market expects

here's why 👇 the data in this thread is based on reviewing bankruptcy filings, talking with creditors, and a variety of assumptions. please note that these are estimates and are intended to be directional rather than definite. this is not investment advice and please do your own research.

Why We Aren't (S)Topping

(for my first ever long X post, I'm releasing a note I sent early this this morning to Galaxy counterparties and clients)

The sun hasn’t yet risen in NYC, but I know it will. From Galaxy HQ north of Battery Park, the Hudson River looks like a sea of black but for the occasional glow of ferry lights appearing from or receding into the darkness. But Bitcoin is awake. If you want to sleep in this market, you better not wake up for a glass of water at 3am and look at the Bitcoin price, because you’re liable to be greeted with a fat green candle that makes returning to bed difficult. BTC is trading above $59k, and apparently traded as high as $59.5k in the early hours on the Eastern seaboard of the United States.

There are reasons – if you’re reading this you probably know a lot of them. The BTC ETFs took in a whopping net $576m of BTC yesterday (Tuesday Feb. 27), with BlackRock alone seeing $520m of inflows, its largest ever day. Saylor is still buying for MSTR; Reddit is going public and said it may continue to add BTC, ETH and MATIC to its balance sheet. Fidelity Canada (different from Fidelity Investments) is recommending a 1-3% allocation. Every day we see news that another RIA platform has added support for the ETFs. A wave of new demand is smashing against a programmatically scarce asset of which 75% is held by long-term holders, many of them diamond-handed zealots forged in the fire of several volatile market cycles.

One big question I’m hearing this week – where are we in the “cycle?” Notably, Bitcoin is trading just 12.16% below its prior all-time high. Bitcoin’s 4th halving will occur in about 52 days. At this point prior to the last two halvings, BTC was still down 60%+ from its previous all-time highs. Effectively, the bull runs of 2017 and 2020 hadn’t yet begun at this stage in Bitcoin’s supply schedule.

52 days before 2nd Halving (9-JUL-16)
BTCUSD $455.22 (-59.86% from ATH)

52 days before 3rd Halving (11-MAY-20)
BTCUSD $6,174 (-68.56% from ATH)

52 days before 4th Halving (20-APR-24)
BTCUSD $59,330 (-12.16% from ATH)

Although there have only been 3 halvings, and at 15 years old Bitcoin is still young by the standards of any asset class, some have raised worry that we may be speedrunning the “cycle” this time around. I suppose the notion is that the run we’ve seen over the last year might be the bull run, and that the normal course of post-halving bullish cycle may not occur. If we make a new ATH before the expected halving date of Apr. 20, 2024, that would further exacerbate this view, some say.

I’m here to say that I don’t believe that for a second. This time is different. The advent of Bitcoin ETFs in the United States is truly a monumental shift that will disrupt everything we know about Bitcoin price cycles, how to assess holder behavior, and intra-crypto rotational dynamics. But before I get into that, here’s a pile of data that suggests we are not yet topping.

Long & Short-Term Holders

Long-term holders are still mostly holding strong, currently possessing about 75% of all BTC supply. In just the last few days, we have seen a small decline – signifying a marginal transfer of coins from long to short term hands – the magnitude is nowhere near what we’ve seen in prior cycles.

MVRV Z-Score

Another way to visualize the cyclicality of Bitcoin price action is to examine the aggregate cost basis of the Bitcoin supply. While market value (market capitalization) is calculated by multiplying the current circulating supply by the last known price, realized value (realized capitalization) sums the value of coins at the time they last moved onchain. For example, if I bought a coin for $100 in 2012 and haven’t moved it since, that coin contributes $100 to the aggregate realized market cap. If we calculate a Z-score, the ratio between the difference of market cap and realized cap, and the standard deviation off market cap, we can evaluate whether Bitcoin is overvalued or undervalued.

Futures Open Interest

While BTC futures open interest is nearing all-time highs, so too is CME’s market share at more than 25% of all OI. Whereas prior peaks coincided with market tops, those futures markets were dominated by offshore crypto-collateralized exchanges, and market participants were much less institutional. They used volatile cryptoassets as collateral, sometimes an exchange’s native token (RIP FTT), and took on crazy amounts of leverage. Today, CME dominates and traders must post cash. And you have bigmarket players now – such as the authorized participants for the Bitcoin ETFs – that are using futures to hedge rather than for leverage.

Indeed, as @DylanLeClair_ pointed out (), the futures complex is completely different to prior cycles. The percent of crypto-margined futures open interest is “down only.”

More on leverage – shout out to Hannah Burgess who flagged this chart from @cryptoquant_com for me. The leverage ratio across exchanges is lower than it was just 2 months ago, let alone last summer. By dividing futures exchanges’ open interest by their total BTC reserves (i.e., custodied assets), you can get an idea of what user leverage. Increasing values indicate more investors taking leverage risk, while decreasing values suggest lower risk. (Image omitted due to 4-image max on X, see subsequent tweet)

Retail Interest

There’s definitely some retail interest, as exhibited by ETF inflows (more on ETFs below), but some of the toppy metrics haven’t yet rebounded. Google Trend data shows still minimal search interest, app store rankings show the retail crypto apps are not peaking as they have during prior runs, Twitter mentions are well below prior peaks, etc. (Image omitted due to 4-image max on X, see subsequent tweet)

Bitcoin ETFs

The ETFs have added assets on a net-basis over 21 of the last 22 days – and incredible feat. Yesterday was the third largest day of net inflows, and Monday was the 4th largest day. Flows appear to be accelerating, not stagnating or subsiding.

Bloomberg Intelligence (@JSeyff)

Despite incredible volumes and flows, there’s plenty of reason to believe that the Bitcoin ETF story is still just getting started. As we wrote in our October 2023 report “Sizing the Market for the Bitcoin ETF,” () the primary net new accessible market for these vehicles are wealth managers and financial advisors, who have not had a real way to allocate client capital to Bitcoin exposure. While we are periodically seeing headlines of this or that RIA adding support for the ETFs, there is $40tn of AUM at banks and broker/dealers that has not yet turned on access. We are likely to see a constant drip of headlines over the next 3-18 months about these platforms adding access – and these won’t just be catalyzing headlines, they come with the chance of new inflows too!

US Wealth Management - By Platform Type
Broker-Dealer = $27.1tn
Bank = $11.9tn
Registered Investment Advisors = $9.3tn
Total US Wealth Management AUM = $48.3tn
Source: Galaxy Research; Data: Dakota (Oct. 2023)

In April, we will also get the first round of post-ETF-launch 13F filings, and (I’m just guessing here…) we are likely to see some huge names have allocated to Bitcoin. New platforms, new investments, and higher prices compound on each other, creating a feedback loop.

Declining Volatility

Over time, BTC’s volatility has declined, and it is likely to continue declining over time. ETF buyers, especially advisor-managed accounts, are much less likely to day trade than cryptocurrency exchange users. Said another way, if a large portion of BTC ends up inside ETFs, these assets will likely be stickier than BTC held on a crypto exchange. (Image omitted due to 4-image max on X, see subsequent tweet).

Intra-Crypto Cyclicality

That stickiness is also likely to dampen intra-crypto cyclicality. Long time crypto traders and observers will know that, historically, in bull runs BTC typically leads, then when it stagnates or tops money rotates further out the risk scale, culminating in an “altseason.” Bitcoin held on a crypto exchange can be easily swapped for Ether, and then for altcoins. But Bitcoin held in ETFs cannot be so easily swapped, nor are ETF holders – again if they are heavily comprised of advisor-managed accounts – likely to swap even if they could. The ascendancy of the Bitcoin ETFs will lower the likelihood of major intra-crypto capital rotations. And if Ether ETFs get approved, it will become increasingly difficult for other altcoins to see capital inflows relative to those two because, after all, BTC and ETH together comprise most of the capital and offer exposure to nearly all of the market narratives.

Bitcoin’s 4th Halving

Just a quick word on this. We all know that, historically, Bitcoin halvings have preceded major bull runs (usually by a few months). While the reduction from ~900 new coins to ~450 new coins per day is small in absolute terms (and relative to BTC’s daily float of $10-25bn over the past few months), nonetheless prices are set on the margin and there really aren’t many coins for sale at these prices. But beyond any supply impact – which again I believe is marginal– this will be the first halving in which major US asset managers have a marketing machine working to educate on Bitcoin, and there is no better Bitcoin education than learning about the halving. So it’s a narrative event first (a quadrennial marketing moment) and a supply event second, though I think both aspects will be impactful.

Can’t (s)top Won’t (s)top

All this is to say, my answer to that burning question – where are we in the cycle? – is that we haven’t even begun to reach the heights this is likely to go. The ETFs are genuinely a game changer and they are still just getting started. Given the flows we are seeing, both in the ETF complex and through our desk, I think it’s reasonable to see a new all-time high within a matter of weeks. We’re starting to hear Bitcoin spoken about alongside gold and treasuries as macro hedge assets – just this morning I heard a traditional finance research analyst suggesting Bitcoin is becoming a genuine “hedge to fiat debasement” on national television. Bitcoin is prime time now, and while it might be hard to believe, things are just starting to get exciting.

Alex Thorn
Head of Firmwide Research, Galaxy
New York City

https://x.com/DylanLeClair_/status/1762608995989115254?s=20

galaxy.com/insights/resea…


disclaimers below

Disclosure Regarding Coin Ownership
Coin: BTC
Author: YES
Galaxy (including its affiliates): YES

Legal Disclosure: This document, and the information contained herein, has been provided to you by Galaxy Digital Holdings LP and its affiliates (“Galaxy Digital”) solely for informational purposes. This document may not be reproduced or redistributed in whole or in part, in any format, without the express written approval of Galaxy Digital. Neither the information, nor any opinion contained in this document, constitutes an offer to buy or sell, or a solicitation of an offer to buy or sell, any advisory services, securities, futures, options or other financial instruments or to participate in any advisory services or trading strategy. Nothing contained in this document constitutes investment, legal or tax advice or is an endorsement of any of the stablecoins mentioned herein. You should make your own investigations and evaluations of the information herein. Any decisions based on information contained in this document are the sole responsibility of the reader. Certain statements in this document reflect Galaxy Digital’s views, estimates, opinions or predictions (which may be based on proprietary models and assumptions, including, in particular, Galaxy Digital’s views on the current and future market for certain digital assets), and there is no guarantee that these views, estimates, opinions or predictions are currently accurate or that they will be ultimately realized. To the extent these assumptions or models are not correct or circumstances change, the actual performance may vary substantially from, and be less than, the estimates included herein. None of Galaxy Digital nor any of its affiliates, shareholders, partners, members, directors, officers, management, employees or representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the information or any other information (whether communicated in written or oral form) transmitted or made available to you. Each of the aforementioned parties expressly disclaims any and all liability relating to or resulting from the use of this information. Certain information contained herein (including financial information) has been obtained from published and non-published sources. Such information has not been independently verified by Galaxy Digital and, Galaxy Digital, does not assume responsibility for the accuracy of such information. Affiliates of Galaxy Digital may have owned or may own investments in some of the digital assets and protocols discussed in this document. Except where otherwise indicated, the information in this document is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. This document provides links to other Websites that we think might be of interest to you. Please note that when you click on one of these links, you may be moving to a provider’s website that is not associated with Galaxy Digital. These linked sites and their providers are not controlled by us, and we are not responsible for the contents or the proper operation of any linked site. The inclusion of any link does not imply our endorsement or our adoption of the statements therein. We encourage you to read the terms of use and privacy statements of these linked sites as their policies may differ from ours. The foregoing does not constitute a “research report” as defined by FINRA Rule 2241 or a “debt research report” as defined by FINRA Rule 2242 and was not prepared by Galaxy Digital Partners LLC. For all inquiries, please email contact@galaxydigital.io. ©Copyright Galaxy Digital Holdings LP 2024. All rights reserved.

this bill from @SenWarren massively expands the bank secrecy act, imposing bank-like KYC rules on non-custodial software products, including FOSS. and it’s gaining steam with 5 new co-sponsors 👀

this would be disastrous for #bitcoin and crypto in USA
warren.senate.gov/newsroom/press… specifically the bill calls for dramatically expanding the bank secrecy act to cover open source software, including non-custodial wallets, miners, and validating nodes

the #bitcoin gamma squeeze from last week could happen again 👀

if BTCUSD moves higher to $35,750-36k, options dealers will need to buy $20m in spot BTC for every 1% upside move, which could cause explosiveness if we begin to move up towards those levels

more 👇 when dealers are short gamma and price moves up, or when they are long gamma and price moves down, they need to buy spot to stay delta neutral. last week’s expiries will dampen potential explosiveness, but it’s still in play.

compare today’s gamma profile to last week’s. (thanks to @Amberdataio for helping us calculate this)

options market makers in #bitcoin are increasingly short gamma as BTC spot price moves up.

when you’re short gamma and spot px rises, you need to buy back spot to stay delta neutral.

this should amplify the explosiveness of any short-term upward move in the near term. more 👇 when dealers are short gamma and price moves up, or when they are long gamma and price moves down, they need to buy spot to stay delta neutral.

using data from @Amberdataio, we can calculate dealer positioning, and our analysis shows dealers are increasingly short gamma starting around $28.5k and above. at $32.5k, market makers need to buy $20m of delta for every subsequent 1% move higher. the positioning implies that market makers need to buy back increasing amounts of BTC as spot moves higher, which should add to the explosiveness if any upward move in the short term.

once and for all — this Unicoin thing is fake.

the IMF did not announce a new global CBDC with the “DCMA”

some likely fake org (DCMA) posted a press release on @PRNewswire and it tricked tons of people (including smart friends of mine!)

here’s to spot this fake news 🚩🚩🚩 some obvious red flags if you just read the press release. first, look at the end. fake person w/ generic press release distribution service (email4pr lol). if DCMA was affiliated with IMF, it would come from IMF, not a made up person with a greensboro NC phone number

the folks at @yugalabs just announced that their twelvefold #bitcoin #ordinals auction will start tomorrow. here are some of my initial thoughts on supply, auction style, and licensing

https://twitter.com/yugalabs/status/1632162026641342469

my guy @hiroto_btc wrote in friday’s @glxyresearch newsletter about the importance of yuga, the worlds largest issuer of NFT intellectual property (30%+ of global NFT market cap), entering the inscriptions fray. read gabe’s note at the top here: galaxy.com/research/insig…

NFTs on #bitcoin built w/ inscriptions & ordinals will be a $5bn market within two years

our new whitepaper has everything you want to know about: all the data, the history, how they work, the controversy, modeling their impact on bitcoin, projecting growth

let’s dive in 👇 everything in this thread comes from a new @glxyresearch white paper we released this morning, written by the teams at galaxy research & bitcoin mining

@FullNodeChuck @bitcoinbeezy @hiroto_btc @GuerillaV2 @SimritDhinsa galaxy.com/research/white…

looks like @yugalabs just started inscribing their TwelveFold collection in the last 15 mins at block height 777872 this is the first one ordinals.com/inscription/51…

markets are tumbling across the board, and #bitcoin and digital assets are among the hardest hit. btcusd correlation to equities is at an all-time high. some thoughts on where we could be headed in the near term this thread is a summary. i sent this note to our clients moments ago. conta.cc/3wjbUdB you can sign up to receive our newsletter here gdr.email

last quarter saw more than $10bn invested in crypto/blockchain startups by venture capitalists, the biggest quarter on record, despite a huge retraction in all markets

where did the money go? 🧵 this thread is a summary. read the full report i sent to clients friday here:

docsend.com/view/pcqedfadn…

#bitcoin fees are at all-time lows. the craziest thing? fall 2021 was the first bull run not accompanied by a major spike in fees.

how is that possible? what does it mean? here's a thread explaining the most confounding (and awesome) chart in bitcoin. (remember june 2021) i explain the low-fee environment in 5 key trends:

1 - Segwit adoption
2 - increased use of Tx batching
3 - reduced OP_RETURN usage
4 - growth of the Lightning Network
5 - reduced miner selling

i summarize each here, in detail in this report for clients: docsend.com/view/jsgnh3vns…

IT'S OFFICIAL: yesterday (june 27 2021), saw the slowest #bitcoin blocks in TEN YEARS (since 2010). blocks times avg. 23min, instead of the target 10min. the latest "china ban" is the most disruptive action the bitcoin network has ever faced, but it will survive, adapt, thrive 👇 june 27, 2021 was the slowest block time by a LONG SHOT since 2010. here are the top 25 SLOWEST days since 2010 for #bitcoin's average block time. (we exclude 2009 because few people even knew bitcoin existed and there were many days with slow blocks).

regarding the darkside / colonial pipeline ransom, we looked on-chain & found a pattern that seems to show the funds ultimately flowed to a trading desk or exchange willing to comply with a US warrant.

there’s no evidence of a #bitcoin or bitcoin wallet security vulnerability👇🏼 on sat may 8, ransom funds seem to have been sent from a US exchange to a darkside address & moved around in several other txs that day.

after lying dormant for several weeks, on may 27, ~69.6 BTC eventually landed at the warrant address.

Video games generate more annual revenue than music and movies combined. No one is talking about this. Smartphone games are generating an enormous amount of revenue. via @NewzooHQ