Large Inflows, Crypto Markets on The Rise, Ether Spot ETFs & A Bitcoiner VP Candidate

You can now listen to a summary of this week's Weekly Wrap on Spotify and Apple Podcasts. It is a summary with the help of AI-voices. 

        

What Happened This Week

Last week ended with the news that the German Government had finished the sale of all its Bitcoin. It took them 24 days to clear their total holdings of almost 50’000 BTC, with an average transfer price of about $58’480 and netting more than $2.9 billion from the sale.

On Saturday, the world was shaken up by the news that Donald Trump was shot and wounded in an assassination attempt at his rally in Butler, Pennsylvania. The crypto markets reacted very positively to the news. Especially Trump-associated coins like MAGA or TREMP rose rapidly, with MAGA surging 34% and TREMP 67%. The odds on Polymarket of Trump winning the presidential election in November jumped from 60% to 70% right after the news broke, indicating that participants in the prediction markets seem to believe that the failed assassination attempt might actually strengthen Donald Trump and increase his chances of winning the election.

Bitcoin, Ethereum and the crypto market traded to the upside on the weekend and experienced a spike in volume after the Trump news broke to the market on Saturday night. BTC closed last week up almost 9% with the first green weekly closing candle since early June, ETH closed up 10% in the previous week, which is the first positive weekly closing since the end of May.

Switzerland with a Yearly Record of Weekly Inflows Last Week

Digital asset investments products experienced the fifth-largest weekly inflows on record, with a total of $1.44 billion in inflows last week. Bitcoin accounted for $1.34 billion of the inflows, ETH saw $72 million flowing in; and SOL $4.4 million. The U.S. led with $1.3 billion for the week, but the positive sentiment was seen around the world, most notable being Switzerland with a new yearly record of $57.5 million of inflows, followed by Hong Kong and Canada with $55 million and $24 million respectively.

Powell: Interest Rate Cuts Before Inflation Falls to 2%

Jerome Powell, Chairman of the Federal Reserve, mentioned on Monday, that the Fed will not wait until inflation falls to 2% before cutting interest rates. At the moment, they are still in need of greater confidence that inflation is moving sustainably to the downside, but he also said that they have seen good inflation data lately, which increases that confidence. The next meeting of the Federal Reserve is at the end of July, but market participants are not expecting a cut in interest rates before September. For the September meeting, however, traders are expecting the first of three cuts until the end of the year with a 95% probability, as the chart below indicates.

Ethereum Spot ETFs to Launch Next Week?

There was some movement when it comes to the Ethereum spot ETF approvals this week. The SEC has asked the issuers on Monday to submit their final S-1 versions until mid-week, and the SEC had no further comments on the recently submitted S-1s. Two sources mentioned that the ETFs could start trading as early as Tuesday, July 23, which is next week. Bloomberg ETF experts Eric Balchunas and James Seyffart are also expecting the new products to start trading this coming Tuesday. So, it looks like the crypto market is in for a new round of excitement with the Ether spot ETFs launch in a few days.

J.D. Vance – a Bitcoiner?

Former president Donald Trump has chosen Senator J.D. Vance as his running mate, a onetime critic who became his loyal ally and a young millennial guy who is joining a race of two elderly men - a clear signal from Trump. Additionally, this decision is once again a step towards the Bitcoin and crypto communities. J.D. Vance is known to personally hold Bitcoin, and he has spoken positively about Bitcoin and cryptocurrencies in the past. How far we have come, now even official candidates for the vice presidency of the U.S. are Bitcoiners, how do you think Satoshi is feeling about this right now?

Mt. Gox Saga

Mt. Gox BTCs were on the move again this week, with roughly 100’000 BTC being sent to two unmarked addresses early during the week. Afterward, several community users reported receiving emails from the Kraken Exchange that stated that Kraken has successfully received creditor funds from the Mt. Gox trustee and that it will take them 7–14 days to deposit the funds into the user accounts. The question we all are asking ourselves is, how many of the users who get some of their long-lost BTC back will actually sell their newly acquired BTC and become wealthy fiat holders? A vote on the Reddit Mt. Gox forum suggests that out of 467 participants, 260 (55%) chose to not sell their BTCs after receiving the compensation, while 88 (18%) chose to sell it all. Of course, this vote is not worth much, but it’s still interesting to see that not everyone might actually sell everything as a certainty. Time will tell!

Russia: Embracing Cryptocurrencies for International Payments?

An interesting development in Russia: The Russian money laundering watchdog proposed that the creation of infrastructure for payments in cryptocurrencies should be accelerated. This comment was made ahead of a parliamentary vote on digital assets' legislation. There are also ideas of allowing traditional stock exchanges, such as the Moscow Exchange, to provide cryptocurrency trading services to certain qualified investors.  President Vladimir Putin also spoke on the use of digital currencies at a government meeting and praised the experimental introduction of a digital rouble, a blockchain-based asset backed by the central bank. 

BTC Spot ETFs: Large Inflows Again This Week

After a week with over $1.3 billion inflows into the Bitcoin spot ETFs last week, this week was once again accompanied by large inflows on Monday and Tuesday, with over $700 million flowing in on the first two days of the week. Wednesday and Thursday were a little quieter, with $50 million and $85 million of inflows, respectively. This week’s inflows so far bring the total cumulative flow since the launch in January to $16.6 billion, recently reaching a new high, as seen in the chart below.

This Week’s Price Action

When it comes to price action across the crypto markets this week, we can observe that Bitcoin has outperformed Ethereum so far this week. Other large-cap altcoins, like Solana, are up even more, with SOL being up roughly 15% for the week. While some smaller-cap altcoins, like RUNE are outperforming the larger coins so far this week, memecoins like WIF, PEPE or POPCAT are back alive, and some of them are showing weekly performances of +50%. Another outperformer this week is WLD. Probably due to the news regarding upcoming token unlocks.

In the TradFi world, the S&P500 is down almost 2% for the week, the Nasdaq is down more than 3%, and the Russell 2000 is in the green, up 1.4% on the week. The S&P 500 and the Nasdaq are set for the first negative week since the end of May. It seems our comment on the stock market sentiment from last week’s Weekly Wrap is coming true.

Market Sentiment

While the stock market CNN fear and greed index is still in the Neutral zone, as it has been for a couple of weeks if not months straight, the AII members turned even more bullish this week, with 52.7% feeling bullish for the stock markets in the next six months, likely due to Powell’s comments on rate cuts on Monday, and 23.4% being bearish for the coming six months, a small increase from last week’s 21.7%. There was a special question asked regarding the current valuation of stocks and 44% of the voting members seem to think that valuations are mixed with some stocks expensive and others cheap. 36% voted that stocks in general are overvalued.

Guess what? Crypto markets are back in Greed territory, that was fast! Just last week, we were in Extreme Fear…

Our Take

An interesting week is coming to an end. With the turbulent weekend around former President Trump's shooting and record high inflows into crypto investment products during the previous week, the stage was set for a positive week for Bitcoin and crypto. Most coins are up for the week while the stock market is trading to the downside, an interesting dynamic. Memecoins and lower cap altcoins are among the weekly’s best performers at the time of writing.

Developments around the Ether spot ETFs were the topic again this week, and it seems that the products will start trading this coming Tuesday, July 23. While the traditional markets have now slowed down a little bit, with a slight rotation into smaller-cap stocks, as the performance of the Russell 2000 seems to indicate, market participants are expecting three rate cuts this year, with a 95% probability of the first cut at the September meeting.

Something to watch for in the coming weeks is the development of the presidential race, with Biden on the edge of dropping out of the race (83% chance on Polymarket) and chances of Kamala Harris becoming the democratic nominee rising to more than 60% on Polymarket as well. Additionally, Trump will be speaking at the Bitcoin Conference on July 27. Interesting times!

While many market participants are likely on vacation and traders are not expecting much action over the next few weeks, there are some interesting potential catalysts upcoming, be it the Ether spot ETF launch, Mt. Gox repayments, developments around the Solana spot ETFs or Donald Trump’s appearance at the Bitcoin Conference. Let’s keep an eye on the markets!

The Week Ahead

Thursday, 25 July 2024

• U.S. – GDP
• U.S. – Initial Jobless Claims

Friday, 26 July 2024

• U.S. – Core PCE Price Index, PCE Price Index