In Markets
Bitcoin briefly topped the A$105.4K/US$70K mark earlier today, but is yet to convincingly break out above. We’ve been consolidating in this region since March, albeit with some dips below A$90K/US$60K. Bitfinex analysts suggest that long-term holders’ selling was a key reason for Bitcoin’s retreat from all-time highs, but on-chain data suggests these holders have begun to reaccumulate. The amount of Bitcoin and Ethereum on exchanges has fallen roughly 10% this year to historically low levels. Unfortunately, Bitcoin’s active addresses are also at five-year lows. Bitcoin finishes the week flat at A$102,495 (US$69,037), while Ethereum lost 2.8% to trade around A$5,582 (US$3,772). Most other coins eased back a little: Solana fell 5%, XRP (-2%), Dogecoin (-6%), Cardano (-2%) and Shiba Inu (-3.5%). The Crypto Fear and Greed Index is at 73 or Greed.
From the IR OTC Desk
While the general news flow for cryptocurrencies continues, no announcement has been overarching for market pricing. This week, for want of a better turn of phrase, has been relatively uneventful: and this has been evident in the price action which has remained range bound.
For the last few weeks now, we have highlighted that both monetary policy and cryptocurrency specific political events will drive cryptocurrency price action – we still believe this remains true, despite a very muted cryptocurrency pricing reaction to the SAB 121 repeal by the Biden Government.
This week’s price action was driven by a softer than forecast US PCE inflation index (April). On the Core, the PCE Price Index came in at 0.2% (April) relative to a market expectation of 0.3%. Core PCE YoY (April) remained unchanged at 2.8%.
Economic releases this week are particularly light, and include:
In Australia (AEST)
- Wednesday 11:30am AU GDP (Q1)
- Thursday 11:30am AU Balance of Trade (April)
In US (AEST)
- Tuesday 12:00am US ISM Manu. PMI (May)
- Wednesday 12:00am US JOLTs Job Openings (April)
- Thursday 12:00am US ISM Services PMI (May)
- Friday 10:30pm US Non-Farm Payrolls (May)
In China (AEST)
- Monday 11:45am CN Caixin Manu. PMI (May)
- Friday 1:00pm CN Balance of Trade/Exports/Imports (May)
The BTC Volatility Index continues to trend downwards from the April peak.
On the OTC desk, flows in the majors have been of size, despite being irregular in timing. In general, we have seen more sellers than buyers, with a focus on ETH. In addition to the majors, well known Alts are also actively being traded. This week, AAVE, SOL and DOGE have been of particular interest. We continue to see very strong two-way interest in USDT and USDC. These flows have been consistently building in both our Sydney and Singapore offices and show no sign of slowing.
In times of reduced volatility we continue to monitor spread trades, with a particular focus on ETH/BTC which is down -2.91% on the week to trade at 0.0545. It is expected that a positive impulse in ETH/BTC will lead material Alt allocations.
For any further information, please feel free to reach out.
In headlines
Aussie Bitcoin ETF launches today
Overseas media is reporting that Australia’s first Bitcoin ETF is launching today. That’s not quite true, given that Global X 21 Share’s EBTC launched in 2022 and currently has A$106M (US$71M) in assets under management. However, Monochrome’s new Bitcoin ETF is the first one to hold Bitcoin directly and offer in-kind redemptions. It may be on CBOE rather than the ASX, but it will be widely available through other platforms and apps, including CommSec.
Biden vetoes pro-crypto resolution
Rumours of a big shift in the Democrats’ approach to crypto appear to have been exaggerated with President Joe Biden vetoing the SAB 121 guidance repeal. The SEC guidance prevented banks from custodying crypto, with bipartisan majorities in the House and Senate passing the repeal despite Biden’s veto threat. However, the White House did say in the veto announcement that it was “eager to work with the Congress to ensure a comprehensive and balanced regulatory framework for digital assets.” On the other side of politics, Republican senator Ted Cruz has just started mining Bitcoin in Texas using three machines.
Crypto election money floods in
The crypto industry is gearing up to fight for pro-crypto candidates from either party in November’s US elections. Coinbase followed the lead of Ripple and a16z and donated US$25M (A$37.3M) to pro-crypto super PAC Fairshake, which has now amassed US$160M (A$239M) and is in the top five largest super PACs this election. The I Stand With Crypto campaign has almost signed up 1 million supporters and has raised more than US$87M (A$130M) for its own PAC.
Terraform Labs settlement
Singapore-based Terraform Labs and its founder, Do Kwon, have reached a tentative settlement with the SEC over the US$40B (A$59.8B) collapse of the Terra Luna project in 2022. The details will become public when the settlement is filed on June 12. Kwon still faces charges in the US and South Korea. Meanwhile, Binance founder Changpeng Zhao has started his four-month, low-security prison sentence on money laundering-related charges in California. With a net worth of US$36.6B (A$54.7B), he’s believed to be the wealthiest person ever sent to jail.
Mt Gox Bitcoin moves
Bitcoin experienced wobbles after 107,547 Bitcoins were transferred from the collapsed OG crypto exchange Mt Gox to an unknown wallet. However, former CEO Mark Karpeles said there’s no dump coming immediately, with Bitcoin due for distribution in October.
Ethereum ETF S-1 forms files
The Ethereum ETFs could launch later this month after issuers filed the amended S-1 forms they need to be approved to start trading. Franklin Templeton revealed it will waive fees for the first six months and then charge 0.19%. JP Morgan analyst Nikolaos Panigirtzoglou expects strong interest in the ETFs: US$1B to US$3B (A$1.5B to A$4.48B) flow in by the end of the year, however, he thinks the “initial market reaction to the launch of spot Ethereum ETFs is likely to be negative” due to Bitcoin’s first mover advantage and the impact of outflows from Grayscale’s ETHE. The muted market reaction to the ETFs suggests that most participants are also unsure about the initial impact, even though Grayscale Research expects ETH ETFs will see 25% to 30% of Bitcoin ETF demand. The supply of ETH on exchanges is at a historic low of 10.6%, with US$3B (A$4.48B) worth withdrawn from exchanges since the May 23 approval. And 27% of the supply is staked. Kris Kay from the DeFi Donut YouTube channel argues that every dollar of inflow will have a 4x to 32x greater impact on Eth’s price than Bitcoin due to supply constraints.
BlackRock’s Bitcoin ETF is the most successful
BlackRock’s iShares Bitcoin Trust has surpassed the Graycale Bitcoin Trust as the world’s largest Bitcoin ETF. IBIT now holds 288,670 Bitcoin, while Grayscale’s initial stash of 620K has dwindled to 287,450. The ETFs were again positive last week, with US$48.8M (A$72.9M in new inflows. So far, IBIT has accounted for 26% of BlackRock’s 2024 entire inflows across all of its products, and FBTC is 56% of Fidelity’s. BlackRock is the world’s largest asset manager, by the way.
More memecoins than people soon
Almost half a million new coins were launched on Solana in May, 177,000 tokens were created on Ethereum L2 Base, and 39,000 tokens were launched on the BNB chain. Austin Federa, head of strategy at the Solana Foundation, claimed the ludicrous number of new tokens created was a good thing that’s “bringing the cost of experimentation and new idea creation to near zero.” The Pump.fun website enables anyone to launch a token with a few clicks.
PayPal stablecoin on Solana
PayPal has launched its stablecoin PYUSD on Solana. According to the analytics platform Artemis, the stablecoin transfer volume on Solana has reached US$1.5 trillion (A$2.24T) over the past year, ahead of Ethereum’s volume of US$885 billion (A$1.32T). The PYUSD stablecoin offers a “confidential transfers” feature to enable merchants to keep transactions for customers private from the public but still visible to regulators.
Echoes of 2020
CryptoQuant founder Ki Young Ju has compared the current high on-chain Bitcoin activity and accumulation to a similar period in 2020, which ended with a sharp spike up to US$64K (A$95.6K) by April 2021. “Same vibe on #Bitcoin as mid-2020. Back then, $BTC hovered around $10k for six months with high on-chain activity, later revealed as OTC deals. Now, despite low price volatility, on-chain activity remains high, with US$1B (A$1.5B) added daily to new whale wallets, likely custody.”
Until next week, happy trading!
