Welcome to the On the Margin newsletter, hosted by Ben Strack and Casey Wagner. Here’s what we’re delving into on this (glorious?) Monday:
- BTC price dropped to $60,000. How much lower could it go?
- Economic data to watch before the week of July 4.
- We are in the home stretch for ETH ETFs in the United States, according to fund company filings.
How low can you go?
No, we didn’t just bring the stick out of limbo in an early summer celebration. Flo Rida and T-Pain’s voices don’t sound on a boombox circa 2008 either.
It’s a less fun type of bass, most would agree. We are talking about the price of Bitcoin, which continued its sell-off today.
BTC fell to around $60,000 around 1 p.m. ET on Monday, down about 5% from the previous 24 hours.
Near-term catalysts for a renewed uptrend appear rare, according to some analysts and industry executives.
After all, Mt. Gox redemptions – in bitcoin and bitcoin cash – are expected to begin in July, according to a Monday letter from the defunct exchange. Félix Jauvin from Blockworks weighed in on X:
Not to mention, Bitcoin miners “need to aggressively sell their Bitcoin reserves” as their costs more than doubled after Bitcoin’s April halving, noted CK Zheng, co-founder of ZX Squared Capital.
Mining giant Core Scientific, for example, self-mined 447 BTC and sold 453 BTC last month (it must sell all the bitcoins it mines, per terms, when it emerges from bankruptcy in January). Rival Marathon Digital sold 390 of the 616 BTC (63%) it generated in May and is holding about 1,000 fewer bitcoins than at the start of June, according to CryptoQuant data.
“On the demand side, institutional investors will step in to build their new bitcoin positions when the price returns to an attractive level,” Zheng told Blockworks. “Allocation to Bitcoin by these investors is still in its early stages. »
Overall, BTC’s inability to break into new territories (despite many chances) has scared people away for the moment, added John Glover, CIO of Ledn.
“The main factor remains that the market is long and this selling is leading to a reduction in position by those who were expecting a rapid advance to new highs,” Glover said.
Not long ago, some were optimistic that bitcoin would hit $100,000 by the end of 2024 – citing strong Bitcoin ETF flows, bipartisan dynamics in U.S. crypto policy, and the decline European Central Bank rates as catalysts for a breakout. But BTC funds have suffered capital outflows for several weeks in a row, Congress is moving slowly, and the Fed has chosen not to follow the ECB’s lead.
Still, Zheng said Bitcoin’s bull cycle probably hasn’t even reached its halfway point. The “problematic” level of US debt, continued institutional adoption and the Fed’s possible interest rate cut should result in a new all-time high over the next 12 months, he added.
Glover predicts the rally will resume toward the end of summer due to the launch of ether ETFs or an increase in inflationary pressures. He gives a target peak of BTC for this cycle between $85,000 and $95,000.
But when it comes to our main question, BTC probably has more room to run, the executives said.
The current cost of mining Bitcoin, around $53,000, will most likely serve as a floor for this short-term decline, Zheng said. Glover sets the floor for this correction at around $56,500.
Zheng added: “Any significant drop in the price of Bitcoin to the current level will provide an excellent entry point for long-term investors. »
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$1.2 billion
The amount of investor capital that has exited crypto investment products globally over the past two weeks, according to data from CoinShares.
Net outflows from crypto vehicles totaled $584 million last week alone – driven by “investor pessimism about Fed interest rate cuts this year,” CoinShares’ James Butterfill said in a report from Monday.
Bitcoin products were hit the hardest, losing $630 million between June 17 and 21. US BTC spot funds accounted for around 86% of these outflows.
On our radar
Happy Monday! We’re in the heart of summer and it’s a busy week of economic data ahead of the July 4 holiday. Here’s what’s on our radar:
- The first unemployment claims, as always, will be published on Thursday. After seeing a continued increase in claims last week, markets will want to see a more moderate reading. If the labor market manages to remain strong, economic growth is unlikely to slow too much, which would ultimately increase the chances of a soft landing from the Fed. Crossed fingers.
- The most important event of the week will be the PCE report, scheduled for release before markets open on Friday. Analysts expect the overall year-over-year figure to show a 2.6% price increase, with Core PCE (which excludes food and energy prices) remaining the same. PCE is the Fed’s preferred inflation gauge, so a cut in May would increase the chances of a rate cut in the fall, which would likely help stock prices along the way.
- We have another busy week for Fed speakers. Fed Governor Lisa Cook will deliver remarks Tuesday, followed Friday by Richmond Fed President Tom Barkin and Governor Michelle Bowman. After last week, it’s unlikely anyone will stray too far from the party line, but it never hurts to try.
The final stretch of the ETH ETF
Fund groups poised to launch ether spot ETFs took another step forward on Friday, submitting amended registration statements (S-1s) to the SEC.
Finalizing the text on these documents is a final step for the products to be traded after the US regulator last month accepted rule changes proposed by exchanges to list these ETH funds.
Issuers had received suggestions for “light” revisions from the SEC on June 14, people familiar with the filings told Blockworks last week.
The latest S-1 amendments – while indicating seemingly smooth exchanges between issuers and the SEC – did not include much groundbreaking information.
Among the new features, however, was the planned 0.20% fee for the VanEck Ethereum Trust. Before that, only Franklin Templeton had revealed its expected price – at 0.19%.
These fees are similar to those of spot bitcoin ETFs launched in January. Some industry observers have said they expect ETH fund flows to be about a fifth of those for Bitcoin ETFs, which brought in about $15 billion in their first five and a half months.
Other companies are likely waiting for BlackRock — the world’s largest asset manager — to disclose the price of its iShares Ethereum Trust ETF “to see what they need to orbit,” Bloomberg Intelligence analyst Eric Balchunas said. in an article
SEC Chairman Gary Gensler gave a vague timeline “sometime during the summer” for the launch of the ETH ETF. But ongoing dialogue between the SEC and issuers suggests this could end sooner rather than later.
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Bulletin board
- Bitcoin miner Riot Platforms said Monday it had commandeered a special meeting of Bitfarms shareholders in an effort to replace board directors. This is the latest development in Riot’s apparent drive to take over the company.
- Days after reports surfaced that the CFTC had opened an investigation into Jump Crypto, Chairman Kanav Kariya announced his departure from Jump on X Monday. His message did not mention any regulatory hurdles or legal issues.
- Reps. French Hill (R-Ark.) and Chrissy Houlahan (D-Pa.) traveled to Nigeria last week to see imprisoned Binance executive Tigran Gambaryan. Lawmakers said they were pushing for the embassy to get involved in Gambaryan’s repatriation.
