The Crypto Comms #58; the Institutions are coming

In the face of regulatory scrutiny, Bitcoin remains resilient engulfing nine weeks of selling pressure in just one week. The move above $30,000 comes on the back of institutional hype at the prospect of a Spot Bitcoin ETF in the United States.

In this issue

• Bitcoin analysis
• $199mn Flows BlackRock ETF
• Institutional adoption
• Latest happenings
• Listening material

Bitcoin analysis

Bitcoin/Dollar is in a complicated area with conflicting signals underlining a mixed but potentially positive picture.

BTC/USD is up 16.2% over the week, reaching a high of $31,500 before finding resistance. In the last two weeks, price has traversed both May lows ($25,800) and highs ($29,900). The break to the upside turned out to be a bullish engulfing weekly candle, which took out the previous 9 weeks of trading in one swoop.

On a macro perspective, BTC/USD has entered the mid-band of the power-law corridor, which delineates Bitcoin’s long-term adoption curve over the years. BTC/USD also found buyer demand at the pivotal 200-weekly exponential moving average after nine weeks of sideways consolidation.

This is a positive technical development and is in keeping with the local higher-low, higher-high trajectory that eventually leads to new all time highs, historically. Once the $45,000 — $52,000 price-band gets taken out, 6-figures will be within reach. And Litecoin will probably be on its way to 4-figures post-halving.

Litecoin Fundamental Data Show Resilience as Transactions Hit New Milestone

At the same time, the open interest/market cap ratio and funding rate have increased in tandem. The Cumulative Volume Delta shows an uptick for both stablecoin-margined contracts, and Spot demand, though the former is more pronounced. In other words, the move up was mostly futures driven, not spot driven.

Typically, futures-heavy market moves are more prone to volatility due to funding rates and liquidation events. But considering that the Fed is both restrictive (with rate hikes) and accommodating (liquidity efforts) with regards to money supply access, it’s unclear how far the goal-posts have moved this time around. Powell’s acknowledgement of “stablecoins as a form of money” will certainly be considered a historic moment in hindsight.

Meanwhile, on-chain data by Glassnode analytics shows that HODLers are accumulating at a steady pace of 42,200 BTC per month, highlighting an undercurrent of demand, despite thin order books and low liquidity.

All in all, the market is proving to be a dynamic and complex machine, showing signs of resilience in the face of continued regulatory scrutiny.

$199mn Flows on the Back of BlackRock’s ETF application

From the traditional investor front, things seem to be heating up. Crypto investment products saw inflows of $199 million last week — the biggest net inflows since July 2022, according to CoinShares data.

Bitcoin is the main driver of inflows with $187.6 million. The influx of capital broke a nine-week trend of outflows in one swoop, which is in line with the adjacent price-action for the week. Bitcoin market dominance (BTC.D) has reached 51.6%.

Last week, the trend was one of institutional fomo, where investors piled into bitcoin exposure to capitalise on both the BlackRock ETF news as well as many other new ETF applications filed with the SEC.

Institutional adoption

While we’ve all heard this story before, each Bitcoin cycle brings bigger and bigger players into the fold.

As of today, institutional hype for Bitcoin and select assets is very real. EDX exchange backed by finance giants Charles Schwab, Fidelity Digital Assets and Citadel Securities launched institutional-grade trading in four assets, including Bitcoin and Litecoin after the BlackRock filing.

Several other firms, including Invesco, WisdomTree, and crypto index manager Bitwise Asset Management have filed for an ETF application. If approved, BTC ETF funds will likely drive flows towards the space, impacting the landscape dramatically due to significant financial resources, driving economic growth in turn.

While some have expressed concerns that BlackRock’s ETF filing could be an attack vector against the digital asset, since the ETF filing on June 15, the price of Bitcoin surged roughly 20% and surpassed the $30,000 mark for the second time this year.

Cheers.

Latest happenings

• HSBC Offers Crypto ETFs for Hong Kong Clients
• Litecoin Fundamental Data Show Resilience as Transactions Hit New Milestone
• FED Chairman Jerome Powell views “Stablecoins as a form of Money”
• IMF Announces Push For Global CBDC to Eliminate Cash
• EDX Exchange Backed by Charles Schwab, Fidelity, Citadel Offers Bitcoin, Litecoin trading
• Bitcoin Dominance Hits 50% for the First Time in 2 Years
• Report: Crypto.com Market-Makers Trade Tokens for Profit
• Crypto Community Donates $1 million to Detective ZachXBT following Defamation Lawsuit

Listening material

• Indigo Nakamoto — Ordinal development on Litecoin

Dear readers,

The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Tuesday. I am not perfect and this is not a science — nor is this newsletter analysis a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.

Thank you for reading.

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