In Markets
Whether it was Trump’s speech, or some other factor, Bitcoin rose to almost A$107K (US$70K) and within 5% of a new all-time high before taking a big dip – possibly after polling suggested new Democrat Presidential candidate Kamala Harris is in a strong position to win, or news broke about billions in seized Silk Road coins moving on-chain. In the US, the personal consumption index rose just 0.1% last month, increasing confidence of an interest rate cut in September. However US national debt just hit A$53.4 trillion (US$35T) and there is growing speculation that the AI fueled stock market boom might come to a shuddering halt with OpenAI reportedly burning A$7.6B (US$5B) a year while workplaces including MakerDAO are finding AI isn’t as useful as hoped. Microsoft, Amazon, Meta and Apple all release earnings reports this week. Bitcoin finished the week flat around A$101,794 (US$67K) while Ethereum is down 4% to $5041 (US$3,289) after the new ETFs saw net outflows. Solana gained 4%, XRP was flat, Dogecoin lost 6.8% and Cardano fell 5%. The Crypto Fear and Greed Index is at 74 or Greed.
From the IR OTC Desk
Forward looking policy and political stability have remained the most important pricing inputs for cryptocurrencies. Additionally, this week the US Federal Open Market Committee (FOMC), the Bank of England (BoE) and the Bank of Japan (BoJ) all meet (separately) to discuss monetary policy. These meetings add to an already busy economic calendar, in which policy action can be greatly resultant to the price of risk assets – including cryptocurrencies.
Additional to the heavy economic schedule is the ongoing political speak from the primary US Presidential candidates. While currently unofficial, incumbent Vice President, Kamala Harris, could officially receive the ‘formal’ Democratic Presidential nomination as early as this week, with virtual voting on the position expected to begin Thursday. Currently, there are no other qualifiers for nomination – those applicants which satisfy the Party rules for nomination.
Once the nomination is confirmed, it would make sense to hear more detail on the political policy which will be run into the election. And this may include policy on digital assets – which has been more recently addressed by Republican nominee Former President Trump. The nirvana scenario for cryptocurrencies would be positive mutual agreement on what a digital future looks like. Watch this space.
In Australia, Wednesday at 11:30am (AEST) delivers the Q2 inflation report. This will be the most critical input for the 6th of August Reserve Bank of Australia (RBA) monetary policy meeting. Current economic forecasts expect the Q2 Trimmed Mean inflation (YoY) to remain at 4% – well above the RBA’s 2-3% target band. If Q2 inflation is at or above this expected level then the August RBA Board meeting will certainly be ‘live’ – a 25bp increase in the cash rate could be near a ‘coin-flip’ decision.
Other considerations for Australia, includes the foreign policy being tentatively announced within the US election process. For the time being, the first reactor has been the AUD/USD, which is down nearly 1.5% on the month to trade at 0.6550. The cause of the depreciation was attributed to a much harder line of policy around US foreign tariffs, including those on China – one of Australia’s main trading partners.
In the Australia (AEST)
- Wednesday 11:30am AU Inflation data (Q2)
- Thursday 11:30am AU Balance of Trade (June)
In the US (AEST)
- Wednesday 12:00am US Job Openings (Jolts) (June)
- Thursday 04:00am FOMC Interest Rate Decision (August)
- Friday 12:00am US ISM Manu. PMI (July)
- Friday 10:30pm US Unemployment data/AHE (July)
In China (AEST)
- Wednesday 11:30am CN NBS Manu. PMI (July)
- Thursday 11:45am CN Caixin Manu. PMI (July)
In Singapore (AEST)
- Wednesday 12:30pm SG Employment data (Q2)
On the OTC desk this week, each trading session has held a unique story. At the end of last week, the story was a rapid increase in short-dated option premiums specifically relating to the event risk of the Nashville Bitcoin Conference, where Republican Nominee Donald Trump was the headline speaker. Following, general euphoria remained with cryptocurrency asset allocators tracking protocol fee income – of benefit to Solana. Now, the positive news flow has slightly abated for the time being, with wallet trackers confirming the movement of BTC from a US Government owned wallet – seized BTC tokens relating to Silk Road activities.
Flows have remained skewed to the majors (BTC, ETH) and SOL. Additional trading interest has also been evident in NEAR and ARB. While stable coins remain the dominant flow across the OTC desk, more interest is starting to develop in small market cap tokens. If the positive price action in the majors can remain, we expect this interest in smaller market cap tokens to increase.
For any further information, please feel free to reach out.
In Headlines
Trump and the Bitcoin stockpile
Donald Trump fell slightly short of promising to set up a formal Bitcoin reserve during his appearance at Bitcoin 2024. Instead, he pledged to not sell any of the 213K Bitcoin the US currently holds or acquires in future. “This will serve in effect as the core of the strategic national Bitcoin stockpile,” he said. However, about 95K of the total actually belongs to Bitfinex as it was seized from hackers who stole it from the exchange in 2016. As if on cue the US Government moved A$3B (US$2B) of its seized Silk Road coins overnight, although Arkham Intelligence and other analysts believe they are moving to institutional custody rather than being sold, probably the US Marshall’s previously announced deal with Coinbase Prime. While CNBC and the Wall Street Journal’s reports on Trump’s speech led with the “stockpile” pledge, Bloomberg didn’t mention it, and the Washington Post didn’t report it until about 1000 words into their piece.
Trump’s other crypto pledges
Trump received thunderous applause for pledging to fire SEC chair Gary Gensler on day one. So much so, he immediately repeated the pledge to milk the applause despite the fact he doesn’t appear to have the power to fire Gensler whose term ends in 2026 (though Gensler might quit with a hostile President). He also promised to shut down Operation Choke Point 2.0 (the colloquial name for the effort to dissuade banks from dealing with crypto companies) and announced he’d appoint a crypto presidential advisory council. Trump also spoke favourably about developing stablecoins in the US and supporting Bitcoin mining.
Ethereum ETF launch ruined by Grayscale
The first day of the Ethereum ETFs was a spectacular success, with the eight freshly minted Ether ETFs taking in US$107 million (A$164M) in net inflows amid US$1.1 billion (A$1.7B) in total volume. Excluding the Bitcoin ETFs, BlackRock’s ETHA had the highest first-day volume of the 600 or so new ETFs launched in the past 12 months. The net inflow figure was even more impressive considering US$484M (A$739M) outflows from Grayscale’s Ethereum Trust (5X more than flowed out of GBTC on day one). While the ETFs took in more than US$1.17 billion (A$1.78M) over the first four days, ETHE outflows topped US$1.5B (A$2.3B) for a week one net outflow of US$341M (A$520M). Steno Research’s Mads Eberhardt points out that GBTC’s outflows decreased significantly after the first 11 days, and given the ETHE outflows are much higher “relative to AUM, we believe that peak outflow will occur sometime this week.”
Other big moves in US politics regarding crypto
Republican Senator Cynthia Lummis is introducing a bill to direct the Treasury to purchase 1 million Bitcoin over a period of five years. “It would be of value, in my opinion, to have a hard asset that backs the U.S. dollar and that grows in value instead of declines in value,” she explained. The bill would see the Treasury hang on to that Bitcoin for 20 years unless they need to be sold to reduce the debt. Independent Presidential Candidate Robert F Kennedy wants the Treasury to buy 500 Bitcoin every day until it has amassed 4 million BTC. The Financial Times reports that the new Democrat Presidential Candidate Kamala Harris’s team has reached out to top crypto companies including Coinbase, Circle and Ripple Labs in an attempt to change the perception that the party is anti-tech and anti-business. She was also in talks to appear at Bitcoin 2024, but thought better of the idea. Gemini founder Cameron Winklevoss said talk is cheap and if Harris wants to demonstrate a change in approach “you can definitely retire Gary Gensler before November. Show us what can be.” 28 Democratic representatives and candidates wrote a letter to Harris calling on her to appoint a pro innovation SEC chair, engage with crypto industry experts, include pro crypto language in the party platform and to select a VP candidate who knows something about crypto. The Fairshake political action committee this week became the largest super PAC with US$202M (A$308M) raised – more than Trump supporting Make America Great Again. While Republican supporting Bitcoiners are currently making a lot of noise, surveys suggest Bitcoiners are drawn from every political orientation and are as likely to be liberal or moderate as conservative.
Solana overtakes Ethereum on fees
Solana has overtaken Ethereum L1 in weekly total fees for the first time according to Blockworks Research. The platform took US$25 million (A$38M) in revenue last week, while Ethereum took US$21M (A$32M). Ethereum has deliberately reduced fees and moved transactions to L2s this year. Solana Floor also claimed today that Solana “tops Ethereum in 24 hours DEX volume, active addresses, fees and revenue generation.”
Bits and pieces
Mt Gox has finally distributed at least two thirds of its Bitcoin to creditors after ten years and the feared dump hasn’t happened just yet. BlackRock’s Head of Digital Assets Robert Mitchnick says it’s unlikely we’ll see a bunch of crypto ETFs launching in the wake of the Ether ETFs. “If you think of Bitcoin, today it represents about 55% of the market cap. ETH is at 18%. The next plausible investible asset is at, like, 3%. It’s just not close to being at that threshold or track record of maturity, liquidity, et cetera.” There’s more than a billion dollars in token unlocks happening in August, with large amounts of tokens from Avalanche, Wormhole due, along with smaller unlocks from Sui, Zetachain and dYdX. Until next week, Happy Trading!
