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  • Writer's pictureVimal Gor

Trovio November Flash Report

Updated: Feb 15

Digital assets continued their rally higher in November, with our flagship Digital Asset Fund returning a net estimate of 11.0%* for the month bringing the YTD returns to 76.5%. Renewed investor activity across a breadth of assets and marketplaces also provided fruitful opportunities for our market-neutral strategy, with the Primrose Capital team returning an estimated 3.6%* for the month, net of fees. 


As we look back over the month, we believe this sustained rally is being driven by the following:


  • Continued progress on approval of a spot BTC ETF by the SEC

  • Expectation of a 2024 in easing of macro conditions (particularly an increase in global liquidity)

  • Inflows to listed products referencing BTC / ETH, and an uptick in exchange volumes

  • Progress towards the conclusion of high-profile cases in the US against Sam Bankman-Fried and Binance’s Changpeng Zhao


Digital asset headlines continue to be dominated by news flow on the numerous ETF applications awaiting approval from the SEC. Throughout November there was confirmation of various meetings between the SEC and leading applicants, as well as specific application amendments that seem to point to an imminent approval of ETFs, by the January 10 deadline. This article by CryptoSlate details the 21 amendments BlackRock made to its iShares Bitcoin Trust S-1 filing which addressed security, valuation and compliance concerns. We believe the meetings and specific revisions over the last few weeks suggest the standing applications are nearing approval. Bloomberg Intelligence Analyst James Seyffart points to an approval window between January 5th – 10th next year, coinciding with the final deadline of the ARK 21Shares application.


Bloomberg Intelligence estimates that Bitcoin ETFs have “the potential to grow into a $100 billion juggernaut”, especially with the participation of well-regarded institutions like BlackRock, Fidelity, and Invesco. This involvement opens doors for broker-dealers, banks, and RIAs in the US to tap into this emerging asset class. When looking at the importance of an ETF and considering the potential impact, many point to the approval of the first gold ETF in 2004 and its ensuing performance. As analyst Willy Woo highlighted in the chart below, the gold ETF approval preceded 8 years of continued positive annual returns, with the gold price more than quadrupling and adding ~$8Tn to its market cap over this period.



Bitcoin’s market cap is less than 1/3 of golds when its first ETF launched, leading many to speculate the impact of an ETF on price may be similar but within a shorter period. Another important distinguishment between gold and bitcoin's potential increased investor access is the inelasticity of bitcoin supply. Whilst higher spot prices incentivise gold miners to increase supply, bitcoin’s supply schedule is hard-coded, no matter the prevailing market price. Whilst we firmly believe the launch of an ETF will be a positive long-term catalyst for mainstream investment into Bitcoin, we remain vigilant of potential pullbacks, especially as we near the approval window for any “buy the rumour sell the news” sell-offs.


Whilst investors await an ETF approval, other listed products continue to receive their largest run of inflows since 2021, with over $1.7Bn invested over the last 10 weeks according to CoinShares.



Spot volumes across cryptocurrency exchanges similarly spiked in November, up 60% MoM. Whilst volumes are increasing, the over $800Bn in November volume is still far below the peak of $4.2Tn in May 2021, leading us to believe we are still far from a retail-driven FOMO market and the current rally is very much institutional led. The derivatives market suggests the same - at the time of writing, CME made up $5.2Bn of the total $19.5Bn in BTC Futures open interest, maintaining its dominance over Binance and other crypto exchanges as the largest futures marketplace.


The capital follow-through from market blue chips to leading large-cap tokens such as Solana and Avalanche indicates improving risk sentiment across the space. An overall lift in macro sentiment is largely being driven by cooling inflation numbers, leading to an over 50bps fall in treasury yields since their peaks in October, further supporting the Alt-Token market.


Please do reach out to the team to drill into any of the areas that we have outlined. December has historically been a positive month for digital assets so we look forward to connecting over the course of the month. If you’d like to speak with our team, please reach out to investor.relations@trovio.io.


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