DigitalX Weekly Crypto Update: Market Trends and Analysis

Market Commentary

The price of Bitcoin has reduced slightly from last week’s US$68,000 high, as it now sits below US$65,000 following looming geopolitical risks and government-linked selling pressures. At the beginning of the week, the digital asset market began to rally with Bitcoin dominance hitting its highest level since April 2021 following both presidential candidates Donald Trump’s and Robert F Kennedy Jr’s bullish commitments to Bitcoin during the Nashville Bitcoin Convention. Former President Trump has pledged to remove SEC Chair Gary Gensler as well as halt the US government’s sell-off of all Bitcoin holdings, with the intention of creating a “strategic Bitcoin reserve”, if elected in November. During the week, a wallet labelled as belonging to the U.S. government transferred US$2 billion worth of Bitcoin to an unidentified wallet, according to Arkham Intelligence data. In addition to further selling pressure from Mt. Gox distributions and rising tensions in the Middle East, the US-based spot Bitcoin ETFs experienced US$18 million in net outflows, breaking a four-day streak that saw inflows as high as US$124 million, as SoSoValue data shows. Further, the U.S. based Ethereum ETFs have had a sluggish debut, witnessing cumulative net outflows of over US$400 million, only recently recording inflows after a four-day streak of outflows.

Grayscale is diversifying its spot Bitcoin ETF offering by launching a “spin-off” of its Grayscale Bitcoin Trust ETF (GBTC). According to Grayscale’s head of ETFs, David LaValle, the purpose of the Grayscale Bitcoin Mini Trust is to help further lower the barrier to accessing Bitcoin in an SEC-regulated investment vehicle. The company will contribute 10% of the spot Bitcoin held by GBTC to its new ETF, set for trading on the New York Stock Exchange (NYSE) Arca. The Mini Trust will charge fees of 0.15% compared to the 1.5% management fee imposed by GBTC, meaning that a fraction of management fees are charged to existing shareholders.

Slovenia has issued the first digital sovereign bond in the European Union, issued and placed by BNP Paribas using their Neobonds platform. The bond issue is one of three interoperability solutions with European Central Bank’s (ECB) wholesale central bank money settlement experimentation program, which recently announced the launch of its second phase in June. Australia carried out a simulated digital bond settlement on a secondary market in May during the first part of the ECB experimentation. This is reflective of the digital bond issues gradually joining the financial mainstream. For instance, The World Bank issued the first blockchain bond in 2019, with the People’s Bank of China issuing a bond on-chain later that same year. 

CEO Comment

The Gap between Bitcoin and the S&P 500 currently amounts to 11%, a slight increase from last week’s 9%.

As for the shift list, which we define as the major events and announcements facilitating the broader market’s transition to Web3 financial rails or the internet of value, the top shifts for this week include:

1. Bitcoin market dominance is a strong indicator for the institutional impact on the space, hitting its all-time high since 2021.
2. Michael Saylor stating Bitcoin could be 7% of global wealth is interesting. It strongly aligns with our thesis around 5-10% of risk weighted portfolios being invested into digital assets. Further, Saylor’s base projection for Bitcoin being US$13 million by 2045 is just as mind blowing as US$65,000 was 10 years ago! At DigitalX we also look at the other 93% which will mostly be tokenised. 

Our Top “alts shifts” for this week, featuring shifts in our altcoin universe that drive our thematic approach, saw the second gap, or the broader digital asset market, drop to circa 56%. This is the TIME for this trade as the bullish set-up for BTC looks more promising, this gap could start to close quickly. The shift to close the gap can happen very quickly and will correlate to the next up move in BTC – the building is happening.

1. It’s a shift off this week – you can now get digital IDs for the Republic of Palau – possibly the most significant nuance is the people’s choice leader of ETH Vitalik Buterin lives in Palau.

What are our favourite thematics for 2024? We continue to like any infrastructure plays of the shift from Web2 to Web3 financial rails and any plays in the real-world asset tokenisation infrastructure, data validation and decentralised storage, as well as scale-up technologies such as ZKrollups. We are closely following all the ”de’s” – DeFi, DePin, DeSoc – (want to know what that means? – message us). 

Lisa Wade, CEO DigitalX

CRYPTO TOP 20 7 DAY PRICE CHANGE

*All figures throughout are in USD unless otherwise specified

Market Updates

• Bitcoin dominance hits highest level since April 2021
• BlackRock battles Bitwise as new Ethereum ETFs struggle to gain traction
• Bitcoin could be a ‘store of value’, says Goldman Sachs CEO
• WisdomTree CEO: Crypto ‘is going to go mainstream’
• RFK Jr: Only Bitcoin can guarantee US dollar’s reserve currency status
• Bitcoin to account for 7% of global wealth, surge in price to $13M in 21 years: Michael Saylor
• Ether ETFs saw $340m of negative outflows in their first week
• VanEck sees Bitcoin hitting $2.9M by 2050 – but a lot has to happen first
• Ledger unveils second new wallet of 2024
• 21Shares’ CETH integrates Chainlink Proof of Reserve to increase transparency
• Michael Novogratz’s Galaxy raises $113 million for a new crypto venture fund
• Grayscale’s GBTC ‘spin-off’ Bitcoin Mini Trust goes live on NYSE Arca
• Bitwise hangs banner on NYSE facade to promote spot Ethereum ETF
• Cantor Fitzgerald announces $2B Bitcoin financing business
• Cross-border BTC payments a top priority for Marathon Digital – Bitcoin 2024
• bitFlyer acquires FTX Japan, plans to launch crypto ETFs
• BlackRock alerts investors against rising crypto scams targeting Bitcoin and Ether ETF holders
• Franklin Templeton leads $11 million Series A into Bitlayer in bid to scale Bitcoin network
• One Trading receives Dutch license, onshores EU crypto futures
• Polymarket whales favour Trump as election betting surges past $400m
• WazirX surveys users on recovery options after $230m hack, leaves customers and industry players fuming
• Solana-based PayPal stablecoin supply closes gap on Ethereum PYSUD
• Aave’s fee switch proposal sparks major rally in AAVE token
• DEX market share surges to record high, outpacing centralised exchanges
• DraftKings dumps NFT business, citing legal developments
• Circle said to be trading around $5B valuation ahead of planned IPO: Sources
• Blackbird, web3 startup from Resy co-founder, wants diners to pay for meals in crypto
• Router launches mainnet, as more projects ‘abstract’ away blockchains
• Trust Wallet partners with TON for further blockchain adoption
• Tether nets $5B profits this year, says its US debt holdings surpassed Germany’s
• Llyod’s of London-backed insurance policies can now be paid for in crypto on Ethereum
• Worldcoin’s World ID verification launches in Austria, increasing access to its eyeball-scanning orbs in Europe
• Coinbase L2 Base hosts 80% of active Uniswap traders – Token Terminal
• Hashrate recovery reduces Bitcoin miners’ selling pressure in July
• Yield-bearing Treasury-backed stablecoin USDY launches on Aptos
• Crypto exchange Luno launches Solana staking in Malaysia

The Shift List

• Coinbase provides custody for DigitalX’s new Australian Bitcoin ETF
• Crypto ETFs to hit ‘model portfolios’ towards year end: BlackRock
• Jersey City to invest in Bitcoin ETFs, the latest pension to dive into crypto
• State of Michigan Retirement System owns nearly $6.6 million worth of ARKB spot Bitcoin ETF
• Japan crypto ETFs boosted by Franklin Templeton and SBI Holdings partnership
• Hong Kong legislator eyes Bitcoin for fiscal reserves
• Pacific island national Palau issues digital IDs on Solana
• University of Wyoming launches Bitcoin Research Institute
• Fidelity International lists Bitcoin ETP on London Stock Exchange
• UAE residents can now trade crypto directly with their bank accounts

Tinkering with Tokenisation

• Slovenia launches EU’s first digital sovereign bond via BNP Parbias
• Bank of England to carry out CBDC, digital ledger experiments
• JP Morgan-backed Ownera partners with Digital Asset’s Canton network
• Major German banks and corporates share tokenised deposit trial results
• California DMV puts 42M car titles on the Avalanche network in digitization push
• BIS, Bank of England unveil Project Pyxtrial for stablecoin monitoring
• Bybit introduces Indian digital rupee CBDC payment option
• TON users gain access to RWA markets with new integration

Macro and Regulatory Environment

• Fed holds interest rates, US equities and cryptos stay in the green
• Trump says he’ll fire SEC Chair Gensler and create strategic Bitcoin reserve if elected: Bitcoin 2024
• Democrats pushing Harris campaign for ‘reset’ on crypto stance, House Rep says
• U.S. strategic Bitcoin reserve to be funded party by revauling Fed’s gold, draft bill says
• Qatar to implement crypto framework by year-end 2024
• Russia legalises crypto mining and brings an experimental regime
• US government-associated crypto wallet transfers $2 billion of DOJ-seized Bitcoin: Arkham data
• United States government holds $12B in Bitcoin – Arkham intelligence
• Coinbase concerned about ‘ongoing regulation by enforcement’ in Australia, despite ‘healthy’ regulator talks
• Stablecoin default guarantees pose risks to the issuing banks, Swiss regulator says
• Crypto use in terror finance rises, but is still relatively small: Singapore
• U.S. presidential candidate RFK Jr. says he’s ‘fully committed’ to Bitcoin
• US Senator withdraws support for Elizabeth Warren’s proposed crypto AML bill
• Luxembourg proposes relaxing DLT laws
• Federal Reserve Board drops enforcement action against Silvergate
• Artists sue SEC over confusing security status of NFTs
• SEC intends to amend complaint in Binance case
• SEC, DOJ charge BitClout founder Nader Al-Naji
• Wisconsin unveils tracker to fight crypto fraud and investment scams
• Biden adviser who attended crypto roundtable joins pro-Harris Super PAC
• England’s Law Commission proposes new property category for crypto assets

About DigitalX

DigitalX Ltd (ASX:DCC) is a leading ASX-Listed Bitcoin and digital asset funds management business. The Company has a 9 year track record mining Bitcoin, blockchain and smart contract development. DigitalX Asset Management is the investment manager of digital asset investment products that provide qualified investors with highly secure and streamlined access to digital asset exposure. To learn more contact the team at [email protected] or visit our website https://digitalx.fund/.

Disclaimer:

The information in this document is prepared by DigitalX Asset Management Pty Ltd (ACN 629 653 121) (DigitalX).

DigitalX is a corporate authorised representative (CAR) (CAR No. 1270748) of Boutique Capital Pty Ltd (AFSL 508011) and True Oak Investments Ltd (AFSL 238184). Boutique Capital is the Trustee of the DigitalX Fund and the DigitalX Bitcoin Fund. True Oak Investments is the Trustee of the DigitalX Asset Reference Token Fund (DxART). All three funds are open to wholesale investors only.

DigitalX is also a corporate authorised representative (CAR) of K2 Asset Management Ltd (ABN 95 085 445 094 AFSL 244 393) (K2), a wholly owned subsidiary of K2 Asset Management Holdings Ltd (ABN 59 124 636 782). K2 is the Responsible Entity and Issuer of the DigitalX Bitcoin ETF (ASX: BTXX) (ARSN 650 945 216) which is open to retail investors. Offers to invest in the DigitalX Bitcoin ETF (BTXX) will only be made in the product disclosure statement (PDS) and this material is not intended to substitute the PDS which outlines the risks involved and other relevant information. You should also consider the Target Market Determination (TMD) issued when ascertaining if the product is appropriate for your needs. A PDS & TMD for BTXX can be obtained at https://www.digitalx.com/funds/bitcoin-etf/. You should consider the PDS & TMD before making a decision to acquire an interest in BTXX.

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