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This Week's Top Stories

“Mt. Gox moves over $700 million worth of bitcoin to unknown wallet: Arkham” – Tuesday, 20.8

• Mt. Gox appears to have transferred 12’000 BTC to an unknown wallet on Tuesday night. Such movements of bitcoin in the recent past have preceded repayments from Mt. Gox to its creditors via distributors such as Bitstamp and Kraken crypto exchange.
• If the transfer this week was used for another batch of repayments, this would mean that there are 44’000 BTC left and might indicate that the Mt. Gox creditor repayments are nearing completion.

“SEC talks with ETF issuers over concerns of Solana being a security preceded Cboe removing 19b-4s” – Monday, 19.8

• The U.S. Securities and Exchange Commission had talks with prospective Solana ETF issuers about its concerns over Solana's potential status as a security. Bloomberg ETF analyst Eric Balchunas tweeted that the Solana ETF application has stalled at the second step of the filing process.
• The decision on the Solana spot ETFs in the U.S. was expected to take be made in spring next year, however with the recent developments, the decision is likely mainly dependent on the U.S. presidential election in November, with experts giving it small chances with the current administration in office.

“Fed minutes point to ‘likely’ rate cut coming in September” – Wednesday, 21.8

• Federal Reserve officials at their July meeting moved closer to an interest rate reduction but stopped short while indicating that a September cut had grown increasingly probable, minutes released Wednesday showed. According to the FOMC minutes, there was an inclination among an unspecified number of officials to start easing at the July meeting rather than waiting until September.
• As of today, the market is fully pricing in interest rate cuts at the September meeting, with a 73.5% chance of a 25-bps cut and a 26.5% probability of a 50-bps cut. It remains to be seen how the data continues to evolve, because the members stated once more that they will be watching the inflation and other data closely until the meeting in September.

“Investors pile back into equities amid ‘full recovery’ in market confidence” – Monday, 19.8

• Equities around the world have rebounded strongly from their early August lows, the Financial Times wrote that investors who slashed their equity exposure during a bout of market volatility in early August sharply increased their holdings as global stocks rebounded.
• U.S. indices, especially the S&P 500 are trading just shy of their all-time highs. The S&P rebounded almost 10% from its low in early August, the Nasdaq is up 13% from its early-month low as well.

Chart of the Week

This week we are taking a look at the various dominance charts. Since the bear market low in November 2022, when FTX crashed and the whole crypto space held its breath for a couple of days, the Bitcoin dominance has increased from 38.7% to 56% today. Meanwhile, the Ethereum dominance has slightly decreased from 16.8% to 15.2%, the stablecoin dominance has seen a large decrease from 17.3 to 7.4% and the overall altcoin dominance has decreased as well, from 27.2% to 21.3%. This dynamic has not developed unnoticed, as we see in the market, Bitcoin is the strong force, and some altcoins are taking turn with outperforming Bitcoin for a while, but overall Bitcoin has been in the lead over the last 18 months. This is likely due to the anticipation and then launch of the new spot-ETFs and all the new money flowing into Bitcoin through these new products. Retail investors are likely not yet back on the altcoin playing field, as the chart below indicates as well.

What’s Happening On-Chain?

Ethereum gas fees have recently hit a new five-year low. This decrease in gas fees can be attributed to the Dencun upgrade in March. The Dencun upgrade, and especially Proto-Danksharding, one of the most important features of the upgrade, enable an order of magnitude reduction in transaction fees for Ethereum rollups, therefore improving scalability without losing in security or decentralization. The Dencun upgrade has accelerated the increase in usage of layer-2 solutions, which plays a role in the reduction of Ethereum’s gas fees. While users might be happy about the lower gas fees, the fee reduction also has implications for ETH as an asset, as lower fees mean that less ETH is burned, which has an impact on the supply. As a result, ETH’s token supply has risen consistently since April.

Digital Asset Fund Flows

Last week, digital asset investment products saw minor inflows totaling $30 million. While Bitcoin saw inflows of $42 million, Solana saw net outflows of almost $40 million, while Ethereum recorded inflows of $4.2 million. Switzerland saw net outflows of $29 million, after being among the top gainers during the last couple of weeks, the country saw the largest outflows last week.

While the flows were not as high during the last week, this week is looking promising, the Bitcoin spot ETFs are on a six-day streak with positive inflows, Tuesday saw net inflows of almost $60 million. The ETH spot ETFs on the other hand are on a negative streak with six consecutive days of minor outflows. While the outflows from Grayscale’s ETHE have stabilized around $20 to 30 million per day, the inflows for the other products are currently not showing much optimism towards Ethereum from investors.

In other news, Brazil approved its second Solana spot ETF this week.

Market Sentiment

The crypto market sentiment has still not quite recovered, as the crypto fear & greed index is still in fear territory (34) today. While Bitcoin has been ranging between $62’000 and $56’000 for the last two weeks, the market sentiment is hovering at fear levels, as investors are not yet sure in which direction the market decides to go next. This choppy price action over the last couple of months could be seen as some kind of time-based capitulation, where investors are losing hope, not necessarily because of the price action itself, but because of the time passed while doing so. The fear and greed index for the stock market, however, is back at neutral levels, after its drop into extreme fear at the beginning of August. This change in sentiment is also visible in the price action, as the S&P 500 for example is already trading just shy of its all-time high today. The AAII survey shows that its members are feeling fairly bullish again, with 51.6% feeling bullish for the next six months and only 23.7% taking a bearish stance. The last time more than 50% felt bullish was in the middle of July, right before the correction to the downside started, will it be different this time?

In Other News

• Marathon Digital purchased approximately 4,144 bitcoins for approximately $249 million in cash at an average price of $59'500 – link
• Attorney Scott Johnsson said that the U.S. Marshals Service (USMS) is almost certainly selling Silk Road Bitcoin – link
• Polygon announced that the migration of MATIC to POL tokens will take place on September 4 – link
• According to Washingtonreporter, Kamala Harris would likely appoint Gary Gensler as the Secretary of the Treasury if elected – link
• Bitwise expands into Europe with acquisition of ETC Group, issuer of the largest physical Bitcoin ETP in Europe – link
• Donald Trump on Thursday promoted “The DeFiant Ones,” a DeFi project led by his sons Donald Jr. and Eric Trump – link

Looking Ahead

While the stock market has recovered a lot of its correction already with the S&P 500 trading just shy of its previous all-time high, the crypto market is still in no-man’s-land with Bitcoin ranging around the $60’000 mark and not much happening overall. As the summer is slowly coming to an end, market participants are likely reminiscing over the price action during the summer and fall of 2023. The question is, how will it unfold this time? Looking back at the previous bull runs, a quiet summer followed by an explosive fall, is something that has happened during almost every bull run so far. While traditional markets are awaiting the September Fed meeting, anticipating the first rate cut since the spring of 2020, crypto markets are still in fear territory, waiting for a fresh narrative. The probable ending of the Mt. Gox repayments and CZ likely being released from prison in September are two things worth keeping in mind over the next couple of weeks.

Below you can find some of the key data releases to watch out for next week.

Tuesday, 27 August 2024

• U.S. – House Price Index

Wednesday, 28 August 2024

• U.S. – FOMC Member Bostic speaks

Thursday, 29 August 2024

• U.S. – GDP (Q2)
• U.S. – Initial Jobless Claims

Friday, 30 August 2024

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