02 August 2024

The WazirX saga continues… we are waiting for newer (and better) options to be shared among all its investors. Meanwhile, Giottus, in collaboration with Bharat Web3 Association (BWA) and other platforms, is dedicated to fortifying the crypto space against cyber threats. Read the announcement by BWA here.

Remember, we are with you in this. We allow self-custody once a user completes the relevant KYC and due-diligence (as mandated by FIU).

Meanwhile, Bitcoin is trading at $64,000 after a topsy-turvy week.

Today, in our Hot Take, we detail BTC trends and what’s ahead.

Before that, let’s have a look at the top stories and macros of the week.

Top-3 stories of the week:

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2

3

The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $2.28 trillion - DOWN  4.6%

• Bitcoin price - $64,220 - DOWN 4.1%

• The dollar index (DXY) - 104.23 - DOWN 0.1%

• Bitcoin Dominance - 56.55% -  UP 0.3%

• Crypto Fear and Greed Index - 57 - Market is in Greedy State

THE HOT TAKE

Uncovering Key BTC Market Signals

This week, Bitcoin’s price dropped to a two-week low of around $62,500, leading to a significant drop of nearly $95 billion in market cap in three days. A lot of factors have led to this drop.

• Tech stocks have experienced steady decline:

According to the Kobeissi Letter, the "Magnificent Seven" tech stocks—Apple, Microsoft, NVIDIA, Google, Amazon, Tesla, and Meta—have collectively lost $2.6 trillion in market cap over the past 20 days.

Since July 10, NVIDIA has led the decline with a 23% drop, wiping out $800 billion. Microsoft saw a 15% decrease, losing $554 billion. Amazon and Google both fell by 12%, reducing their market caps by $259 billion and $288 billion, respectively.

• Fed holds rates steady:

On Wednesday, the US Fed left its benchmark funds rate range unchanged at 5.25%-5.50%.

During his post-meeting press conference, Fed Chair Jerome Powell expressed increased confidence that inflation is returning to the 2% target based on recent data. Although no decisions have been made regarding the September meeting, he indicated that "we're moving closer" to reducing rates. Following these remarks, Bitcoin fell below $65,000.

• Kamala Harris takes lead over Trump

This week, Vice-President Kamala Harris took the lead over former President Donald Trump in odds on a major election betting platform for the first time since launching her presidential campaign. Polls show her making gains on Trump in key swing states.

• Mt.Gox initiates phase two of BTC distribution

According to Arkham Intelligence, Mt. Gox-related addresses recently moved 47,229 BTC (around $3.1 billion) between internal wallets and transferred nearly 34,000 BTC (about $2.1 billion) to a new address this week.

These transfers likely indicate preparations for the next phase of creditor repayments.

Mt. Gox has a history of similar movements, which typically precede transfers to centralized exchanges. These exchanges, including Kraken, Bitstamp, and SBIVC, facilitate creditor repayments.

What did these lead to?

• Bitcoin ETFs witness lowest inflows

On July 31, Bitcoin exchange-traded funds (ETFs) saw a minimal net inflow of just $0.3 million, the smallest since their inception on January 11. BlackRock’s IBIT remained a popular choice, attracting $21 million in inflows. However, two of the top-four issuers experienced outflows for the third consecutive day.

A significant development occurred with Grayscale's GBTC, which saw no outflows. Additionally, July 31 marked the debut of Grayscale’s new mini trust BTC, which received an $18 million inflow. This new fund initially held 10% of GBTC’s Bitcoin assets.

• Bitcoin Dominance surges

Bitcoin’s market capitalization now accounts for over 56% of the total market share — its highest level in three years. On July 29, Bitcoin Dominance inched towards 57%, a level not seen since March 2021.

Meltem Demirors, former chief strategy officer at CoinShares, highlighted a key factor influencing this shift on Twitter: “ETF flows fundamentally altering market dynamics. No longer do BTC gains cycle into alts and the longer tail of crypto assets.”

• Exchange balances went on a roller coaster

Between July 15 and 28, the total amount of BTC held on exchange addresses increased significantly, with over 50,000 new BTC added to exchange balances.

According to CryptoQuant data, Bitcoin exchange reserves began at 2.84 million BTC in July and gradually decreased to 2.70 million BTC by July 23. Following this, reserves rapidly surged to 2.89 million BTC over the next few days. However, since July 29, reserves have been declining and currently stand at 2.69 million BTC.

This is, however, not the end of the tunnel

•  US Senator Lummis introduces a Bitcoin Strategic Reserve bill

On July 31, US Senator Lummis formally rolled out a bill aimed at having the US government amass 1 million BTC, representing 5% of the total supply. At current market rates, 1 million BTC is valued at over $60 billion. She articulated that building up a BTC reserve could act as a hedge against economic volatility and monetary instability.

Last week, Donald Trump attended a Bitcoin conference where he announced his intention to make the US a "Bitcoin superpower" and transform the country into the "capital of the planet for cryptocurrency." If he comes to power in November, there is a higher probability that Bitcoin could be included as the fifth strategic reserve for the US.

• Russia has legalized crypto mining

Russia's stance on crypto is shifting from staunch opposition to a more open approach. In addition to greenlighting crypto mining, the country's parliament recently passed legislation permitting companies to use crypto for international trade transactions.

• Hong Kong lawmaker proposed a Bitcoin reserve

Johnny Ng, a member of the Hong Kong Legislative Council, said he will start conversations with “different stakeholders” to explore possibilities for including bitcoin in the region’s financial reserves. Ng, a member of the Hong Kong Legislative Council, wrote in a post on X on Sunday that it is “worth considering” to assign Bitcoin as part of the region’s official financial reserves.

What’s ahead?

We summarized this beautifully in our twitter thread yesterday (please follow us on Twitter for more such insights).

Do read this thread. So we believe that a new rally is on the horizon soon. Bitcoin may revisit early $60,000 levels but soon after surge ahead given that Mt. Gox repayments will end and anticipation of an interest rate cut peaks late August.

Strap your seat belts. Let us enjoy this ride.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.