Crypto Market Week in Review: Goldman Sachs' Bitcoin Bet & Trump's Crypto Move

London: 19 August 2024 (TraderMade): This past week was filled with highs and lows across the crypto market, with several significant events making headlines.

Among the most prominent was Goldman Sachs' revelation of a $419 million stake in spot Bitcoin ETFs, signaling continued institutional interest despite the fluctuating market dynamics.

Key Takeaways

• Goldman Sachs Invests: Goldman Sachs reveals a $419 million stake in spot Bitcoin ETFs, signaling strong institutional interest.
• Ethereum's Low Fees: Ethereum median gas fees hit a 5-year low, easing transaction costs for users.
• Trump's Crypto Real Estate: The Trump Organization launches a crypto real estate initiative, while Trump discloses his crypto holdings.
• Market Holds Steady: Despite fluctuations, Bitcoin remains range-bound at $58,000, with crucial macro events on the horizon.

Meanwhile, Ether-based ETFs saw a surprising twist, as spot Ether ETF weekly flows turned positive for the first time since their launch. In another development related to Ethereum, the blockchain experienced a five-year low in median gas fees, bringing relief to users who have long contended with rising transaction costs during periods of network congestion.

Partnership news also made waves, with MetaMask announcing a collaboration with Mastercard to launch a crypto debit card. This development marks a step toward mainstream crypto adoption, allowing users to spend digital assets directly from their MetaMask wallets.

On the flip side, the NYSE's plan to list Bitcoin ETF options was scrapped, dampening hopes for increased institutional participation through traditional financial channels. Celsius also made headlines this week, filing a $3.5 billion lawsuit against Tether over a Bitcoin collateral sell-off, adding to the ongoing drama in the world of crypto lenders.

US Senator Chuck Schumer made a bold promise, vowing to push forward a crypto bill for 2024 if Vice President Kamala Harris wins the upcoming presidential election. This political development could be a game-changer for the crypto space as it remains closely intertwined with regulatory oversight.

In parallel, the International Monetary Fund (IMF) is weighing the potential impact of raising electricity prices for crypto mining and artificial intelligence by a staggering 85%, a move that could significantly reshape the industry.

In an unexpected twist, the Trump Organization announced the launch of a crypto real estate initiative, with former President Donald Trump recently disclosing his crypto holdings. This move ties the real estate mogul-turned-politician deeper into the digital currency world.

Global Economic Trends and Their Impact

Turning to the broader economic landscape, the US annual inflation rate slowed to 2.9% in July, marking its lowest point since 2021. This deceleration offers some optimism that the inflationary pressures that have weighed on the economy might be easing.

Across the pond, the UK economy expanded by 0.6% in the second quarter, although inflation picked up less than expected, boosting rate-cut bets.

Technicals & Macro Analysis

BTCUSD

Bitcoin ended the week right where it started at $58,000, after bouncing around both up and down. The price is currently compressing into a wedge pattern, which will soon need to break either upward or downward.

A retest of the $55,000 zone, which aligns with the ascending trendline from late 2023, is possible. Alternatively, a break toward the $66,000 range low is also on the cards. Key short-term factors suppressing Bitcoin's price include the Mt. Gox disbursements (around 140,000 BTC) and recent disbursements from the Genesis administration.

Looking ahead, keep an eye on macro factors, including the Democratic National Convention, FOMC minutes, jobless claims, and Powell's speech at the Jackson Hole symposium.

For the medium term, the upcoming US election will be pivotal. Betting odds are currently tight, with Harris holding a slight lead over Trump. A Trump victory is seen as a bullish outcome for crypto, but Harris could surprise the market by resetting relations with the crypto space.

Senate Majority Leader Chuck Schumer's assurance of a crypto-friendly bill under a Harris presidency adds another layer of anticipation.

Despite these macro uncertainties, other risk assets, like the S&P and Nasdaq, have been rallying. Many signals point to a potential crypto market rally, but the short-term sentiment will depend on order flow.

Key levels to watch: $50,000 / $55,000 / $66,000 / $72,000 / $73,794 (ATH)

ETHUSD

Similar to Bitcoin, Ethereum's price remains range-bound. Typically, Ethereum would be a beta play following positive risk sentiment. Still, with Bitcoin's potential tie to a Strategic Reserve bill under the US election, a short bias on ETHBTC remains.

A potential game-changer could be the launch of a staking ETF that may eventually provide a dividend/income hedge, shifting the dynamics of risk allocation in the listed crypto space.

Key levels to watch: $2,100 / $2,800 / $3,600 / $4,000

Spot Desk Insights

The USDT traded above par for most of the week, yet it had little impact on off-ramping activity as the rising AUD slowed down this activity compared to previous weeks. The CPI release triggered some volatility, but Bitcoin remained range-bound around the $60,000 mark, with the desk witnessing balanced flows for both BTC and ETH.

Altcoin trading activity was minimal, though there was notable interest in Fantom (FTM), one of the premier DAG blockchains, signaling potential opportunities for future investments.

Derivatives Desk Overview

BTC's 3-month annualized futures basis rate continued to hover between 8-10%, while ETH's futures basis rate ranged from 6.5-8%. Options were slightly cheaper than the previous week, with ATM implied volatility for BTC and ETH falling to 52.7 and 63.4, respectively.

Given the potential for macro-driven market movements this week, the derivatives desk suggests considering a long position in volatility via crypto options.

For wholesale investors, now may be the time to discuss packaging options trades into a structured product to capitalize on the anticipated market moves.

What to Watch This Week

• US Democratic National Convention: Kicking off Monday through Thursday, the convention will have significant implications for the political and regulatory landscape.
• FOMC Meeting Minutes: On Wednesday, these minutes will offer critical insights into the Federal Reserve's next steps.
• PMI Reports: French, German, US, and UK PMI reports will drop on Thursday, providing a clearer picture of the global economy.
• Jackson Hole Symposium: All eyes will be on Fed Chair Jerome Powell's speech on Friday, which could have a substantial impact on markets.

Stay tuned as the crypto market continues to navigate a complex web of macroeconomic factors, political developments, and industry-specific news that shape its future trajectory.