Weekly News Digest for Jun 15-21
Market Update
This week, the cryptocurrency market experienced a persistent downward trend, with significant bearish pressure on major assets. Bitcoin showed high volatility, dropping from $66,914 to $64,516, triggering $118 million in liquidations, and ending the week around the $65,000 mark amidst weak demand and mixed technical signals. Ethereum faced similar bearish conditions, fluctuating between $3,495 and $3,645. The broader crypto economy shrank by 1.83%, with over three dozen coins recording double-digit losses. Meme coins like Dogecoin and TRUMP tumbled significantly, while major NFT collections such as Cryptopunks and Bored Ape Yacht Club saw substantial value declines. Despite some minor gains in select tokens, the market sentiment remained largely negative.
News of the Week
U.S.-listed bitcoin miners have reached a record market capitalization of $22.8 billion as of June 15, led by considerable rises in specific stocks and an increase in sector market cap by 24% since the end of May. This growth is spurred by proposed acquisitions and partnership deals, particularly involving Core Scientific, with Marathon Digital maintaining the title of the largest U.S.-listed bitcoin miner. The market cap hike also reflects the U.S. miners' growing share of the network hashrate, currently at 23.8%, despite a general hashrate decline and a hashprice that remains below past levels, suggesting room for future growth.
Nasdaq-listed Microstrategy has purchased an additional 11,931 bitcoins, increasing its total holdings to 226,331 bitcoins valued at $8.33 billion with an average purchase price of $36,798 per coin. This latest acquisition was financed with $786 million from a private offering of convertible senior notes with a 2.25% annual interest rate. Microstrategy, which refers to itself as the "first bitcoin development company," continues to invest heavily in bitcoin using proceeds from sales of convertible notes and excess cash.
Bitcoin has maintained a price above $60,000 for 107 days in 2024, despite a recent 4% decline against the U.S. dollar, and has experienced a surge of over 152% within the past year. It has now spent 28.09% of its entire lifetime above the $10,000 mark, showcasing its increasing stability and resilience in the market. This consistency above five digits indicates a possible new baseline for the cryptocurrency's valuation and hints at a new normal for Bitcoin's pricing.
The Australian Securities Exchange (ASX) will list the Vaneck Bitcoin ETF (VBTC), the first Bitcoin ETF on the exchange, starting June 20, 2024. The VBTC is claimed to be the most cost-effective method for Australian investors to gain exposure to Bitcoin. Vaneck's Asia-Pacific CEO, Arian Neiron, has voiced satisfaction with introducing a regulated Bitcoin financial product to meet the increasing demand for Bitcoin in Australia.
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A Bank of America report reveals a generational shift in investment preferences, with younger affluent investors favoring cryptocurrencies and alternative investments over traditional stocks and bonds. This trend is driven by the belief that traditional investments alone cannot achieve above-average returns, leading to a significant portion of their portfolios being allocated to crypto assets even among the most conservative younger investors. The report anticipates an increase in the allocation to alternatives, influenced by the experiences during market crashes and social media's impact on financial decision-making.
Digital asset investment products have experienced their largest outflows since March 2024, totaling $600 million, due to a hawkish Federal Open Market Committee (FOMC) stance, leading to reduced investor interest in fixed-supply assets like bitcoin. The outflows were mainly from bitcoin, which saw $621 million leave the market, while assets like ethereum and XRP collectively attracted $16 million, indicating varied investor reactions. The outflows were most pronounced in the U.S. with $565 million, while Germany saw inflows of $17 million, showing the diverse impacts of the FOMC's policies on different regions.
Zksync's newly launched ZK token is trading 19% below its initial price at $0.2575, with a market valuation of $932.14 million, placing it 90th among top cryptocurrencies by market cap. Major exchanges like Binance, Bybit, and Gate.io have listed ZK, with Binance seeing the most active trading, contributing to a global trading volume of roughly $485.42 million. The token has particularly gained traction in the South Korean market, with Bithumb's listings showing the won outpacing the U.S. dollar in ZK trades.
Bitcoin miners have seen an 8.4% decline in profits over the past three days due to a drop in the hashprice and bitcoin values, with the network's hashrate slipping below 600 EH/s. The price of bitcoin fell from just above $69,000 to $65,539, affecting the hashprice from $57.36 per petahash to $52.53. The forthcoming difficulty adjustment on June 20 is expected to bring only a minor increase in difficulty, while miners are selling off their BTC reserves more than usual amidst these market pressures.
The Bank of Thailand is reportedly increasing its gold reserves in preparation for a de-dollarized CBDC (Central Bank Digital Currency) driven trading system using the Mbridge project. Gold market analyst Jan Nieuwenhuijs suggests that this strategy is to manage potential trade imbalances, with Thailand consistently buying gold since last November, indifferent to its price fluctuations. The country's move towards accumulating gold is aligned with a broader trend influenced by geopolitical tensions and mirrored by Thai citizens, which may also be stimulated by the recent Cooperation Framework between China and Thailand for bilateral local currency transactions.
Venezuela's government is expected to continue using cryptocurrency to circumvent a new set of U.S. sanctions targeting its oil and gold sectors, as claimed by dissidents and cryptocurrency analysts. Despite corruption scandals involving crypto, such as a multi-billion dollar case that led to a temporary halt in cryptocurrency industry operations like bitcoin mining, Venezuela still sees crypto as a key asset to bypass sanctions. Chainalysis, a blockchain security firm, notes that crypto has been a consistent method for evading sanctions, with Venezuela's state-owned oil company PDVSA planning to increase its use of the stablecoin USDT for transactions, but data on seized crypto transactions related to sanctions evasion remains unavailable.