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Fund Report Q3 2024
GECO CAPITAL: DIGITAL LARGE CAP FUND (DLCF)
Bitcoin
Last week, it seemed like Bitcoin was finally ready to break out of its tight August range, but those hopes were soon dashed. After peaking at the August monthly open, Bitcoin experienced three consecutive days of losses, returning to the familiar zone between approximately $57,250 and $61,650. It closed Friday at $58,674.49, effectively erasing the previous week’s gains and marking a loss of $5,575.52, or -8.68%. The price finished $3,339.51 below the 100D EMA and $4,956.93 below the 200D SMA. Unless there’s a significant weekend move, Bitcoin seems set to post its lowest monthly close since January.
Bitcoin’s open interest spiked to $29.3B late last week as market optimism returned. However, with the sudden pullback, open interest fell back to approximately $25B, aligning with last week’s levels.
Bitcoin: Futures Open Interest Perpetual (USD) - All Exchanges
Ethereum
Ethereum followed the broader market’s downward trend but managed to fare somewhat better toward the end of the week. Despite a peak drawdown of 12.87%, it closed the week at $2,506.27, recording a -8.77% or -$240.79 change, which was relatively strong compared to other assets. ETH outperformed Solana and most other altcoins this week, closing $509.70 below the 100D EMA and $748.45 below the 200D SMA. Despite holding up better than most of the market, ETH is on track to close the month with its worst August performance since 2019.
Unfortunately, Ethereum’s open interest remains uninspiring. Even with the broad market movement last week, Ethereum’s open interest barely changed, remaining lower than last week’s levels at $8.8B.
Ethereum: Futures Open Interest Perpetual (USD) - All Exchanges
Solana
Solana was not spared from the market-wide sell-off, plummeting in a near-vertical drop to close the week at $136.11, down $22.97 or -14.44%. The 100D EMA crossed below the 200D SMA by Tuesday evening, and by Friday’s close, Solana traded roughly $15 below both indicators. While Solana still holds its range, it remains volatile and closely correlated to Bitcoin’s performance, underperforming by nearly 13% in August.
All pricing and indicator values were sourced from TradingView.
ETF Flows
Bitcoin ETFs had been enjoying an eight-day inflow streak, raising hopes that institutional interest had returned. This optimism was supported by two significant inflow days of $252MM (the largest in over a month) and $202MM on Friday and Monday, respectively. Unfortunately, as Bitcoin pulled back, outflows resumed on Tuesday and Wednesday, with $127MM and $105MM leaving the market. From Monday to Thursday, there was a net outflow of $304.2MM.
Bitwise Bitcoin ETF (BITB) is set to acquire $120MM in Bitcoin from the Osprey Bitcoin Trust (OBTC), with OBTC unitholders receiving BITB shares in exchange as the deal concludes later this year.
Grayscale’s mini ETF, $BTC, saw its first outflow since launch, approximately $8MM on Wednesday. On Thursday, Blackrock’s IBIT experienced its second-ever outflow of $13.5MM, the first since May 1st, 2024, ending an 88-day inflow streak.
Ethereum ETFs are currently struggling to attract buyers, with nine consecutive days of outflows. The market’s interest in ETH is significantly lower compared to BTC under current conditions. The streak finally ended on Wednesday with a modest $5.9MM inflow. However, from Monday to Thursday, the net outflow was $18.3MM.
Bitcoin Spot ETF Cumulative Flow (US$m)
SEC Issues Wells Notice to OpenSea
The U.S. Securities and Exchange Commission (SEC) has issued a Wells notice to OpenSea, a leading NFT marketplace, indicating that the agency may soon file formal charges against the platform. The SEC claims that the non-fungible tokens (NFTs) traded on OpenSea qualify as securities, marking a significant escalation in the regulator’s actions against the crypto industry. OpenSea’s CEO, Devin Finzer, expressed surprise at the SEC’s position, arguing that classifying NFTs as securities could stifle innovation and negatively impact the many artists and creators who rely on the platform. In response, OpenSea has allocated $5MM to support the legal defenses of NFT creators and developers who might face similar actions from the SEC.
This development is part of a broader SEC initiative to regulate the crypto sector, including actions against other major platforms such as Coinbase, Binance, and Kraken. The SEC’s intensified scrutiny has led to multiple legal battles in recent years, creating uncertainty within the industry. Some companies are even contemplating relocating outside the U.S. due to the challenging regulatory environment. Despite the ongoing regulatory friction, Finzer remains confident that OpenSea is operating within legal bounds and maintains that NFTs are not securities. The situation highlights the tension between the SEC’s regulatory efforts and the crypto industry’s call for clearer guidelines.
Telegram CEO Detained in France
Pavel Durov, the founder and CEO of the widely-used messaging app Telegram, was detained at Paris-Le Bourget Airport under an arrest warrant. Authorities allege that his platform has been exploited for various illegal activities, including drug trafficking, money laundering, and the distribution of other unlawful content. Telegram, launched by Durov and his brother in 2013, has become a global communications giant with over 950MM active users. Known for its extensive group chat capabilities and optional encryption features, Telegram has faced criticism from Western governments for its perceived lack of adequate content moderation, which some experts argue has made it a haven for criminal activities. French President Emmanuel Macron stated that the arrest is “in no way a political decision.”
Durov’s arrest has sparked a global response, with some accusing Western authorities of political motivations, while others point to longstanding concerns over Telegram’s role in facilitating illegal activities. As a result of the news, TON, Telegram’s digital asset, experienced a volatile downturn, losing 26% of its value over the weekend. Telegram has defended its practices, asserting that it complies with EU laws and that Durov has nothing to hide. The arrest and the subsequent market reaction have also ignited discussions about the responsibilities of platform owners in regulating content and the balance between privacy, security, and financial stability in the digital age.
French prosecutors released Durov from custody on Wednesday after four days of questioning related to the allegations. He was indicted and barred from leaving France until the matter is resolved.
Consumer Confidence Reaches Six-Month High
U.S. consumer confidence hit a six-month high in August, with the index rising to 103.3 from 101.9 in July, driven by increased optimism about business conditions. However, concerns about the labor market grew as the unemployment rate climbed to 4.3%, the highest in nearly three years, despite the overall confidence boost. Consumers’ twelve-month inflation expectations dropped to 4.9%, and financial markets are anticipating potential rate cuts from the Federal Reserve starting next month. Despite this, buying plans for homes, vehicles, and major appliances declined, reflecting rising financial concerns and high mortgage rates.
