Biweekly Headlines 2023.7 W3-4

“It is a mistake for the U.S. government to hobble the industry (Bitcoin) and drive innovation elsewhere.”  – Robert F. Kennedy Jr., U.S. Democratic presidential candidate

Biweekly News Roundup

The Fed’s confirmation of a hike of 25 basis points brought benchmark interest rates to their highest since 2001. BTC has largely unstirred by dueling 25 basis point interest rate hikes – both expected – first by the U.S. Central Bank and then the European Central Bank (ECB). Its resilience continues a recent trend of brushing off macroeconomic events that previously weighed on cryptos. Bitcoin whales account for the most exchange inflows volume since June 2022 as short-term holders become increasingly active. Short-term holder dominance across exchange inflows has exploded to 82%, which is now drastically above the long-term range over the last five years  (typically 55% to 65%). The market value of USDT broke through $83.9B on July 27, a record high. Stablecoin dominance slides as the market cap falls to near 2-year lows. After 16 consecutive months of decline, the stablecoin market dominance has fallen to 10.3% of the total crypto market capitalization.

The Bitcoin hashrate continues to hit all-time highs as competition between miners escalates ahead of the next halving event, JPMorgan said. Bitcoin miners have been up against the ropes over the past year, with record amounts of BTC sent to centralized exchanges to cover costs in 2023. Yet, the industry scored a staggering $184M from transaction fees in the second quarter of 2023, eclipsing the total of 2022 on the back of a BTC price rebound and hype around BRC-20 tokens. Bitcoin mining machines are flowing into Russia as the U.S. market becomes saturated and increased regulatory scrutiny and taxation in the U.S. and elsewhere have made Russia even more competitive.

Crypto investors have poured money into bitcoin exchange-traded products at a record pace ever since BlackRock filed for a spot-based ETF on June 15. The spot-ETF fever has gripped the crypto market in recent weeks. Data shows the BTC-equivalent exposure of ETPs listed worldwide in the four weeks to July 16 surpassed only by inflows seen following the launch of ProShares’ futures-based ETF and other futures-based ETFs in October 2021, which is the second-highest monthly net inflow. BTC spot-based ETFs could bring $30B in new demand for the world’s largest digital asset, according to crypto trading firm NYDIG’s recent research report. Open interest in XRP futures has set a new record of over $1.1B for 2023 as the community continues to celebrate Ripple’s win against the SEC. Twitter bids adieu to Bluebird as Elon Musk rebrands platform to X. The new “AI-X” token opportunistically issued over the weekend following Musk’s announcement jumped 10-fold. Dogecoin registers biggest single-day gain in 4 months, and futures open interest tops $500M. The highly anticipated project co-founded by OpenAI’s Sam Altman launched its WLD token earlier this week. Ethereum’s Buterin expresses concerns over Worldcoin’s identity system, “Proof-of-Personhood,” which faces issues with privacy, accessibility, centralization, and security.

Since the Fed started its aggressive interest rate hike campaign in March 2022, the Japanese yen has depreciated sharply, registering one of the most severe exchange rate turbulence on record. The share of bitcoin trade volume on Japanese exchanges rose from 69% to 80% in the first six months of the year. Indonesia has launched a national crypto asset bourse which was officially put into operation on July 20. Data shows that as of June, 17.54M people in the country had invested in digital assets, more than the number of investors registered with the stock exchange. El Salvador’s bonds surge 62% amid Bitcoin’s ETF-driven rally. President of Russia Putin has officially signed the digital ruble into law, with the amendment to the Russian Constitution set to come into force starting from August 1, 2023. Democratic presidential candidate Robert F. Kennedy Jr. vows to back the US dollar with Bitcoin if elected president as well as make Bitcoin profits exempt from capital gains tax.

Cathie Wood made her initial bold prediction in early 2021, forecasting Bitcoin’s ascent to $500,000 by 2026 due to increased institutional investment in cryptocurrencies. At the beginning of last year, she further increased her bet that the price of Bitcoin would soar to $1M by 2030. Now she firmly believes Bitcoin will skyrocket to $1.5M by 2030. With the halving right around the corner and the prospect of a spot Bitcoin exchange-traded fund on the horizon, the catalysts for crypto seem poised for a breakout in almost any situation.

July 29, 2023

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