Crypto Market Update

The market remains fixated on the supply overhang from the German government and the Mt. Gox estate, as the Germans chose an illiquid holiday weekend to accelerate the sales of their 50,000 BTC seized in a criminal investigation. Over the past five days, BTC is down about 7%, ETH about 10%, and SOL about 2%. The drawdowns over the weekend have cleared a considerable amount of leverage out of the market, with ETH open interest now down to levels seen before traders started pricing in the ETF. Beyond the supply-related issues, this week is consequential for both crypto and macro. In crypto, we expect more clarity on the timing of the ETH ETF launch, with potential S-1 approvals by Friday. On the macro front, the latest CPI release is scheduled for Thursday, which, combined with continued weak jobs data, could expedite discussions about rate cuts. Equities are mixed to start the week, with tech leading and major equity indices flat as the DXY trades slightly higher.

Germans Continue to Offload BTC

The German government accelerated its disbursement of seized BTC over the weekend, sending large amounts to various market makers and crypto exchanges, including Cumberland DRW, Kraken, B2C2 Group, Coinbase, Bitstamp, and Flow Traders.  In total, they have moved approximately 26k BTC from their cold wallets, putting them just over halfway through their entire holdings, with about 24k BTC left to offload. This selling pressure, coupled with less liquid market conditions, has weighed on crypto prices since around last Wednesday. You can track the German government wallet activity here.

Mt. Gox Distributions Have Interesting Timing Wrinkle

The defunct crypto exchange Mt. Gox also began repaying creditors in BTC and BCH as part of its rehabilitation plan on July 5th. The trustee announced that repayments will be made promptly to eligible creditors through designated crypto exchanges, provided certain conditions are met. Last week, Mt. Gox moved 1,545 BTC to a hot wallet on Bitbank, the first of the disbursements to partner exchanges. Unlike the German BTC, which is essentially guaranteed to be sold within a short timeframe, Mt. Gox distributions have more uncertainty over how much will actually be sold and the timing of the distributions. Repayments are being handled by five exchanges with varying distribution timelines: Kraken (90 days), Bitstamp (60 days), BitGo (20 days), and both SBI VC Trade and Bitbank (14 days). These are the maximum timelines each party has agreed to meet and not necessarily the projected timeframe for distribution to customers. You can track Mt. Gox wallet activity here.

Technical Strategy

Ethereum’s decline in recent weeks now looks to have found initial support in an area that appears significant as support to this current decline. The area at $2800 marked support back in May on pullbacks and also held on a closing basis to the steep slide back in April.  Following three straight days of holding $2800, ETH also successfully held this morning ahead of a bounce which has occurred on both an absolute basis as well as on its Market dominance chart.  Overall, the ability to reclaim $3200 will be important before growing too confident that ETH has bottomed. Conversely, it’s important that ETH also not violate 2800 in the week to come as this would postpone the rally and allow for a deeper correction to happen into late July before a larger rally can commence.  While 4/13 intra-day lows at $2537 proved important, any break of $2800 would point to a good likelihood of $2100-$2200 being tested which would signify a very attractive area of intermediate-term support for long-term buyers.

Daily Important Metrics Crypto Size Bullish signal is tied to the crypto market growing Market cap 2.11T +$701M (0.03%) BTC Dominance 53.46 % (-0.59%) Stablecoins Increase in circulating stablecoins is a Bullish signal In Circulation +$112B (-0.01%) In Exchanges +$20B (0.04%) BTC Metrics A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage # BTC Exchanges +$3.0M (0.03%) Funding Rates Positive funding rates indicate traders are Bullish Aggregate +0.4143 (0.2296) Binance +0.9989 (1.2577) Bitfinex +0.2812 (0.2571) Bitmex +0.6835 (-0.0574) ByBit +0.0401 (0.5554) Deribit -0.0001 (0.0022) Huobi +0.7927 (0.7927) Kraken -0.0053 (0.1386) Mean +0.4143 (0.2296) OKex +0.3370 (0.5261) Sentiment BMI : 26 (100.00%) Futures A positive spread between Futures Prices and Spot Prices is Bullish CME Price $57,580 (1.58%) Spot Basis +$789 (1.39%) Volume 482,421 (17.44%) Open Interest 289,360 (2.02%) Options all exchanges Higher open interest change in a bull market is bullish for the sector Volume 10,375 (-15.96%) Open Interest 213,982 (0.80%) Vol. Put/Call Ratio 0.8883 (-23.89%) OOI Put/Call Ratio 0.5174 (1.33%) All metrics as of 2024-07-08 12:00:46 All Funding rates are in bps Crypto Prices Symbol Market Cap Last Price Daily Change Year to Date Relative to BTC YTD BTC $1.11T $56,085 -1.27% 32.79% ETH $359B $2,985 0.62% 31.18% -1.22% SOL $64B $137 0.52% 35.14% 1.77% DOGE $477,342 $0.0005 -12.36% -99.46% -99.60% All prices as of 2024-07-08 11:51:22 Exchange Traded Products (ETPs) Symbol Prem. to Nav Last Price Daily Change Year to Date Relative to BTC YTD BITW -32.38% $33 -1.57% 42.75% 7.49% ETHE -0.98% $28 -0.68% 42.60% 7.38% News Quick Bits CoinDesk Germany Sill Holds $2.2B Worth of Bitcoin, Blockchain Data Show Germany has been running down its coin stash since mid-June. The Block Taiwan builds CBDC prototype platform, plans hearings for next year Taiwan’s central bank governor is set to present a CBDC research report in the parliament on Wednesday, The Block has confirmed. The Block Bitstamp will aim to distribute Mt. Gox bitcoin ‘as soon as possible’ once it arrives Bitstamp says that, while it can take up to 60 days to make the upcoming bitcoin payments to Mt. Gox creditors, it will aim to do so swiftly. The Block July’s $350 million worth of token unlocks includes Worldcoin, XAI, Arbitrum, Aptos, and more Worldcoin's value has fallen about 80% since its peak, but the project will soon begin to double its rate of daily token unlocks. The Block $1 million bug bounty program for ‘Firedancer’ Solana client to begin July 10 The long-awaited independent validator client for Solana, built by Jump Crypto and implemented in C/C++, appears to be in its final stages. Market Data The Block CoinShares notes $441 million rebound in crypto investment inflows last week After three weeks of net outflows, global digital asset investment products returned to net inflows last week, adding $441 million. Mining CoinDesk Bitcoin Mining Profitability Rose in June as Market Adjusted for the Halving: Jefferies U.S.-listed mining companies produced a greater share of bitcoin in June than May as they brought on new capacity while the network hashrate dropped, the report said. Product Updates and Partnerships The Block Celo launches Dango Layer 2 testnet in first step towards joining Ethereum ecosystem Celo will join Optimism's "Superchain" ecosystem of Ethereum Layer 2 networks rather than remain as an EVM-compatible Layer 1 blockchain.