Weekly Roundup: Cryptocurrency Market Analysis

London: 3 July 2024 (TraderMade): The past week has seen significant developments in the cryptocurrency market and the global economy. From significant outflows in Bitcoin ETFs to regulatory actions and economic indicators, these events are shaping the future finance and investment landscape.

Key Takeaways

• Spot Bitcoin ETFs Outflows: Experienced $1.3 billion outflows over two weeks, signaling a shift in investor sentiment.
• New Crypto Tax Rules: The US Treasury announced new tax regulations for 2025, delaying rules for non-custodians.
• SEC Legal Actions: The SEC sued Consensys over MetaMask staking and broker allegations, targeting Lido and Rocket Pool as unregistered securities.
• Julian Assange Freed: WikiLeaks founder Julian Assange was released after a plea deal with the US, ending his long legal battle.

Significant Outflows in Spot Bitcoin ETFs

Over the past two weeks, spot Bitcoin ETFs have seen significant outflows amounting to $1.3 billion. This substantial withdrawal indicates a shift in investor sentiment, possibly due to market volatility or changing confidence levels.

New Crypto Tax Rules from US Treasury

The US Treasury has announced a new cryptocurrency tax regime set to begin in 2025. However, implementing rules for non-custodians has been delayed, giving more time for adjustments and compliance from various stakeholders.

VanEck Files for Solana ETF

In a significant move, VanEck has filed for a spot in Solana ETF. This filing underscores the growing interest in Solana's blockchain technology along with its potential impact on the crypto ecosystem.

SEC Sues Consensys

The SEC has initiated legal action against Consensys, alleging that its MetaMask staking and broker programs constitute unregistered securities. This lawsuit also targets Lido and Rocket Pool, highlighting ongoing regulatory challenges within decentralized finance (DeFi).

US Government Transfers Bitcoin to Coinbase

In a notable transaction, the US government has transferred 3,940 BTC to Coinbase. These Bitcoins were seized from investigations related to the infamous Silk Road. This transfer marks a continued effort to liquidate assets seized from illegal activities.

Sharp Decline in Runes Transactions

According to Dune Analytics, after reaching more than 50% of all Bitcoin transactions in April, Runes transactions plummeted by 88% in June. This sharp decline raises questions about the sustainability and future of Runes within the Bitcoin network.

US Presidential Debate Troubles for Biden

The first extra-official US presidential debate proved disastrous for President Biden, causing a crisis within the Democratic party's reelection bid. The performance has sparked discussions about the party's strategy and candidate viability.

Japanese Yen Hits 38-Year Low

The Japanese Yen has fallen to a 38-year low, prompting Japan to announce a new foreign exchange diplomat to address the currency's weakness and stabilize the economy.

Julian Assange Freed

Julian Assange, the founder of WikiLeaks, has been freed after reaching a plea deal with the US. This agreement ended his long legal battle and allowed Assange to return to Australia.

US Economic Indicators Show Mixed Results

The US economy grew by a modest 1.4% in the first quarter. Consumer confidence has dipped, and core PCE inflation softened to an expected 2.6%. These indicators suggest a mixed economic outlook as the country continues its post-pandemic recovery.

Technical Analysis & Market Sentiment

BTC/USD

Core PCE inflation provided a consensus figure, establishing a solid base in the range. Key levels to watch are 66,000 (midpoint of the current range) and 72,000 (range high).

Despite immediate downside pressures, including Mt. Gox disbursements and ETF outflows, futures and options markets suggest a potential bullish sentiment.

ETH/USD

Ethereum is experiencing similar market dynamics, with a rising basis curve indicating long positions in anticipation of a spot ETF launch in the US. Upcoming SEC amendments on July 8 will provide further guidance.

Spot Desk Activity

Bitcoin's price dipped below 60K but quickly rebounded to close the week at 62.6K, up 7.75% from its weekly low. Ethereum followed suit, closing up 6.81% from its weekly low. USDT traded below parity, and AUD/USD saw a weekly gain of 0.81%.

Balanced flows were observed across stables and majors, with high volumes of altcoins such as PAXG, TRX, ILV, SOL, MATIC, and TON. ETH buying was prevalent, while BTC flows remained balanced.

Derivatives Desk Insights

Basis rates for BTC and ETH have risen to around 12.5% (30-day annualized), signaling a potential change in market sentiment. Volatility remains relatively unchanged, continuing with a downtrend since the March highs.

Selling volatility to capture yield premiums could be a strategic move, with Yield Exit Notes offering a way to capitalize on this trend.

Top Gainers

This week has been particularly favorable for Cardano (ADA), both in its ETH and BTC pairs and against the USD. The highest gains were observed in the ADA/ETH pair with an impressive 8.85% increase, followed by ADA/BTC with a 7.46% rise, and ADA/USD with a 7.20% increase.

Solana (SOL) also performed well, especially in its USD pair, gaining 5.86%, and its BTC pair with a 5.78% rise.

Top Losers

Aave (AAVE) faced the most significant decline this week, dropping 7.82% against USD. Other notable losers included Numeraire (NMR), with a 5.53% decrease against USD, and Internet Computer (ICP), which saw declines in its USD and BTC pairs, falling 3.17% and 3.00%, respectively.

Bitcoin Cash (BCH) also experienced a slight decrease, down by 1.83% against USD.

Most Volatile Cryptocurrencies

Volatility is a crucial aspect of the cryptocurrency market, and this week, ADA/ETH emerged as the most volatile pair, with a fluctuation of 16.07%. Other highly volatile pairs included SOL/USD with a 13.08% change, AAVE/USD with 12.77%, NMR/USD with 12.60%, and ADA/USD with 11.93%.

These fluctuations indicate significant trading activity and price swings within these pairs.

Least Volatile Cryptocurrencies

On the other end of the spectrum, the least volatile pair this week was ETH/BTC, with only a 1.83% fluctuation.

Litecoin (LTC) against USD also showed minimal volatility at 2.89%, followed by Ethereum Classic (ETC) against BTC with a 3.53% change, Dogecoin (DOGE) with 3.59%, and Decentraland (MANA) against ETH with a 4.22% fluctuation.

These pairs exhibited relative stability compared to their more volatile counterparts.

Upcoming Events to Watch

• Fed Chair Jerome Powell speaks at the ECB Forum and US Jolts Job openings report (Tuesday)
• FOMC meeting minutes (Wednesday)
• UK parliamentary elections (Thursday)
• Canada and US unemployment rates (NFPs) (Friday)

Conclusion

Despite a brief pullback, Bitcoin continues its downward trend, breaking the trend line and showing no signs of potential growth. The number of Bitcoin addresses holding more than one BTC has surpassed one million, indicating broader adoption and confidence in Bitcoin as a store of value.

These events highlight the dynamic nature of the cryptocurrency market and the broader global economic landscape. As regulations evolve, market sentiment shifts and new financial products emerge, staying informed is crucial for navigating this ever-changing environment.