In Markets
Bearish sentiment caused by the great German Bitcoin selloff and Mt Gox repayments has abated. The catalyst appears to be the attempted assassination of Donald Trump boosting the pro-crypto candidate’s chances of getting elected up to 71% on Polymarket. Bitcoin surged 8.2% from A$86K (US$58,340) to its current A$96,124 (US$65,310) in the aftermath of the assassination attempt and is up 14% for the week. Many analysts now believe we have bounced off a local bottom and the Crypto Fear and Greed Index surged almost 20 points in a day to its current 52, or neutral. Wildly speculative, unsourced rumours that China may be reconsidering overturning its crypto ban may also be playing a part. The ASX hit a record high of 8,000 points, and in the US the market is now pricing in a 95% chance of an interest rate cut in September. Ethereum gained 15% this week to trade at A$5,162 (US$3,471), Solana gained 16%, XRP surged 25%, Dogecoin (15.7%), Cardano (22%) and Shiba Inu (16.9%).
In Headlines
Trump at Bitcoin 2024
Donald Trump isn’t letting a little thing like almost dying stop him from appearing at Bitcoin 2024 in Nashville Tennessee on July 27. He confirmed he’d still attend within hours of the attempt on his life. The 2024 Republican Party Platform was recently approved and reads like it was written by the crypto industry. It promises to end the crypto crackdown, oppose a CBDC, support Bitcoin mining and the right to self-custody. Rich Rosenblum, co-founder of trading firm GSR, told Decrypt that political volatility, such as an attempted assassination, was a “catalyst for Bitcoin buying” and helped create a “Trump bid” as the odds shortened on his election. “Trump is particularly pro-crypto relative to the Biden administration, so a Trump win should benefit the industry from a regulatory and investment perspective,” he said. Various Trump related meme coins also surged.
Crypto lobbying pays dividends
Trump was famously opposed to Bitcoin during his first term, and while making millions from his NFT sales might have changed his mind, buckets of lobbying money may also have played a part. Crypto critic Molly White’s new project followthecrypto suggests that crypto focused political action committees in the US have raised a whopping US$203 million (A$299.6M) for lobbying efforts in the 2024 election. The leading crypto super PAC called Fairshake is second only to the Trump super PAC Make America Great Again in funds raised. The industry has only spent around US$38M (A$56.1M) on lobbying so far, meaning there’s enough to make a big splash in numerous races between now and November.
Democrat crypto roundtable
Back when the political tides began to turn, a crypto roundtable was set up so the industry could meet with White House officials and senior Democrats. Organised by California Democrat congressman Ro Khanna and billionaire Mark Cuban, the roundtable was held this week and attended by U.S. Rep. Joe Neguse, Sen. Kirsten Gillibrand, SkyBridge Capital chief Anthony Scaramucci, Ripple CEO Brad Garlinghouse, and Galaxy founder and CEO Mike Novogratz. Senior advisor to President Biden, Anita Dunn, represented the White House. “You guys suck on crypto,” one attendee reportedly told Dunn who appeared surprised by the accounts. Afterwards Cuban publicly urged Biden to fire SEC chair Gary Gensler.
Germans run out of Bitcoin
The so-called “German government” Bitcoin sell off has concluded. According to Arkham Intelligence the wallet reached a 0 balance on Friday. Coindesk did a bit of digging and determined it wasn’t the national government at all, it was the state of Saxony and it dumped 50,000 Bitcoin confiscated from a defunct movie pirate site. Many have been speculating at the unsophisticated nature of the selling (there was a much higher market impact than there should have been), however it appears that they may have had no choice as they were obligated to sell confiscated assets within a certain period. Glassnode analyst Checkmatey suggested it was bullish that Bitcoin had easily “absorbed a 50K market sell order in a few weeks…dipped -25% in a very structured and ordered fashion.” The last time something similar happened he said, was LUNA selling 80K when the price more than halved (although those were very different circumstances). The Bitcoin ETFs played a part in stabilising the price – over the course of last week they saw inflows totalling US$1.047 billion (A$1.55B). Hedge funds have been scooping up cheap Bitcoin and Bitcoin whales bought US$4B (A$5.9B) of Bitcoin between July 4-10 which CryptoQuant says is the fastest rate since April 2023.
Ether ETFs definitely possible this week again
Could this be the week the Ethereum ETFs finally begin trading? While there’s not much in the way of actual developments, Nate Geraci, the president of the ETF Store, believes this is “spot ETF approval week… I don’t know anything specific, just can’t come up [with a] good reason for any further delay at this point. Issuers ready for launch.” ETH influencer Anthony Sassano also thinks this is the week, while a “source” told Cointelegraph the ETFs were expected to launch this week too. Bloomberg’s ETF analyst Eric Balchunas said it was unclear why the SEC is taking so long and likened it to “a rain delay in baseball. Gotta just wait.” Issuers have received minimal amendments on the S-1s suggesting the SEC may be close to approval.
SEC drops two crypto investigations
The SEC has dropped two investigations against crypto companies. On July 11 stablecoin provider Paxos announced the SEC had decided against taking enforcement action against it over the Binance USD stablecoin. A letter from the regulator said it has also dropped a three-year investigation into Hiro Systems, the developer of Bitcoin layer 2 style project Stacks. “Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Hiro Systems PBC, formerly known as Blockstack PBC,” it said.
SAB 121 veto vote
While the vote to overturn President Biden’s veto of SAB 121 – the SEC guidance that prevents banks custodying crypto) – failed as expected, the SEC has now created exemptions for certain banks and broker dealers to custody crypto anyway. Industry reactions are mixed; while some see the exemptions as progress, others believe broader regulatory reform is necessary.
Hong Kong tackles crypto crimes while South Korea considers tax delay
Hong Kong authorities are enhancing their ability to trace and disrupt illicit cryptocurrency activities, applying existing regulations and collaborating with centralised organisations. Meanwhile, South Korea is considering delaying its 20% crypto gains tax to 2028 due to investor backlash and market conditions, citing concerns over negative impacts on sentiment and the crypto ecosystem.
Macro Matters with John Toro and Lee Eaton
We recently hosted a discussion between Independent Reserve’s head of business development, Lee Eaton and the head of the OTC trading desk, John Toro. Starting with an analysis of inflation metrics and household savings, the discussion moves to the property market and interstate migration trends. The critical balance of household savings ratio, mortgage costs, and cash rates is explored, with insights on RBA’s potential moves. Additionally, we touch on US politics, the upcoming presidential election, and its impact on markets, including sentiments around crypto policies. Lastly, the broader implications for altcoins in the current economic climate are examined. You can catch up on the first episode of Macro Matters here.
