Crypto Markets Daily Dec 10 2024

Corporate Treasury Holdings

We’ve previously covered MicroStrategy’s creative fundraising techniques, but this week sees more in that vein. Firstly, in addition to their convertible notes sales, MicroStrategy sold over 5M shares of its stock for approximately $2.1B between Dec 2 and Dec 8, and has used the proceeds to acquire 21,550 bitcoins at an average price of $98,783. This brings the company’s total holdings to 423,650 bitcoins, slightly over 2% of the total supply.

Secondly, the news comes as Microsoft shareholders are due to vote later today on whether the tech company should publicly assess adding Bitcoin to its own balance sheet. While the MSFT board has advised shareholders to vote against the proposal, a favourable outcome would only help add to the growing widespread adoption of corporate companies forming their own Bitcoin reserves.  

And despite continued volatility around $100K as we expected, BTC Spot ETFs nonetheless recorded inflows of $479.1M yesterday – a figure which is more than 3x the average net inflow since their launch in January. ETH Spot ETFs also had significant inflows of $149.8M yesterday, following last week’s total inflows amounting to $836.8M. This is at odds with relative spot levels – some of the consistent outperformance in ETH over BTC since Gensler’s late-November resignation has been unwound by the most recent move lower.

However, the move in favour of ETH has not been the largest driver of the fall in Bitcoin dominance as we might have expected. Instead, it is all other altcoins that have driven the dominance of Bitcoin’s market cap lower. The same is true in reverse too – the recent spot price pullback has resulted in a flight back to Bitcoin dominance at the expense of altcoins, rather than Ethereum.

We note, though, that while the current drawdown in crypto prices has been linked to psychological factors near to BTC’s $100K level, it has not occurred in a vacuum – the wider macro picture as we approach the year end is one of uncertainty, both in monetary policy and geopolitical trade policy. Over the next two weeks, major central banks across the globe are convening for the final time of the year, and markets aren’t in harmony in every region. 

In the U.K., the BoE is likely to press pause, after two cuts in August and November – ostensibly as a result of the potentially inflationary pressures from the new Labour government’s budget and a lack of productivity growth given still sticky wage pressures. 

Elsewhere in Europe, the SNB, is expected to cut rates by 25bps amidst the lowest inflation rate in the entire G10 and a rising Swiss franc against the euro which is slowing down its export-driven economy (given that Europe and in particular Germany are Switzerland’s largest trading partner). And we’ve noted in previous comments that the ECB is expected to lean for a 25bps cut. Political turbulence and tariff pressures from President-elect Trump pushed markets towards a larger cut not too long ago – while maybe not this year, the prospects of Lagarde being forced into one in the next remains higher, especially in order to offset any potential tariff costs.

The case for a cut is stronger elsewhere in North America. Canada’s unemployment rate spiked to an 8-year high of 6.8% (excluding the pandemic) despite twice as many jobs being added in November than expected – this has pushed up the odds of a larger 50bps cut from the BoC despite other metrics suggesting a healthy economy. Finally, as highlighted yesterday, tomorrow’s US CPI print will form the last (available) piece of the puzzle for Fed policymakers, as market-traded futures suggest a 86.1% chance of a 25bps cut.