GoMarket Weekly #14

June 14, 2024
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Market Analysis with Mike Ermolaev

It's time for the 14th edition of GoMarket Weekly! Crypto analyst and journalist Mike Ermolaev is here to bring the GoMining community the latest updates and insights from the cryptocurrency world. In this installment, we'll look at the recent movements in Bitcoin and Ethereum, significant trends in altcoins, and updates on regulatory and adoption fronts. Let's GoMarket!

Bitcoin Struggles Amidst Fed Decisions and Market Strategies

In the seven-day range of $66,254- $71,643, Bitcoin tried to consolidate above the $70,000 threshold, but then retracted, trading at around $67,000 at the moment.

This pullback follows the Federal Reserve's decision to maintain the base interest rate at 5.25-5.5% and the US central bank’s revised outlook for rate cuts to just one in 2024. Federal Reserve Chair Jerome Powell took a cautious approach, saying the Fed is hesitant to cut interest rates despite inflation slowly falling back down from its peak. Such moves typically result in a general loss of market confidence in riskier assets, combined with a dampened market mood, thus driving down the price of Bitcoin and other speculative investments.

Moreover, according to Farside data, from June 6 to June 13, total ETF inflows were $663.1 million, primarily driven by IBIT ($558.3M) and FBTC ($53.7M). Total outflows amounted to $704.1 million, with significant outflows from GBTC ($295.9M) and ARKB ($205.8M).

In addition to the overall sentiment of the market, there appears to be another crucial factor weighing down the price of the original cryptocurrency. Analysis from Glassnode highlights the Bitcoin price has struggled to rise because hedge funds are using a cash-and-carry strategy, where they buy Bitcoin through ETFs to hold a long position and simultaneously short Bitcoin futures to profit from price differences without taking on much risk. This market-neutral strategy reduces overall buying pressure, meaning there's not enough organic, non-arbitrage demand to drive the price higher.

While short-term turbulence is unavoidable, forecasts still point to an optimistic future. A study by Bitwise suggests that cryptocurrencies, alongside AI, could contribute an additional $20 trillion to global GDP. So, crypto, led by Bitcoin, is definitely here to stay.

Ethereum's Growing Role as 'Digital Oil'

Ethereum tracked the broader crypto market, trading within a range of $3,434–$3,844. ETH trended lower despite SEC Chair Gary Gensler announcing on June 13, 2024 the likely approval of ETH-spot ETFs in the summer when he gave testimony at the Senate Appropriations Subcommittee on Financial Services hearing.

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Source: Appropriations.senate.gov

Ethereum continues to receive positive attention, with the latest instance of this perspective being the Industrial and Commercial Bank of China, the largest bank in China and in the world, by total assets, referring to Ethereum as 'Digital Oil' in contrast to Bitcoin as 'Digital Gold' in its internal document. The bank emphasizes that Ethereum is continuously enhancing its technology in security, scalability, and sustainability, thereby providing a robust foundation for the digital future. Additionally, the development of stablecoins is seen as a crucial bridge connecting digital currencies to the real world, enhancing Ethereum's relevance and application in the modern monetary system.

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Crypto Airdrops Distribute $4 Billion in 2024

Crypto airdrops have distributed approximately $4 billion in value to users in 2024, with several significant airdrops still anticipated later this year, according to The Block report. The largest airdrops so far include Jupiter, Starknet, and Notcoin, each distributing around $1 billion in tokens. Other notable airdrops came from projects on Solana and Ethereum, such as Wormhole, Ether.fi, FriendTech, and Wen. Historically, Uniswap, Apecoin, and dYdX have been among the biggest airdrops, contributing to the total value of $26.6 billion up until December 2023. Including the 2024 airdrops, this figure could reach an upper bound of $34 billion based on peak token prices.

Crypto's Political Influence Grows

As a further demonstration of crypto's growing influence in politics, the Biden administration is negotiating with cryptocurrency players to accept crypto donations for the presidential campaign, considering platforms like Coinbase Commerce, a payment service used by Trump's campaign, The Block reported citing its sources.

Billionaire Mark Cuban expressed doubt that both US presidential candidates have a sufficient understanding of cryptocurrencies, but acknowledged the importance of digital assets in this election cycle. Regarding Biden, he said he must, “choose between Gensler or crypto voters or it could cost him the Whitehouse.”

As for Donald Trump, he positioned himself as the "crypto president" at a San Francisco fundraiser, raising $12 million and promising to halt what he called the Biden administration's overregulation of the sector. Despite not providing specific policy details, Trump emphasized his support for crypto, appealing to the industry's top players, who are increasingly seeking political influence amid regulatory scrutiny.

Also, on June 12, Trump opened the doors of Mar-a-Lago to Bitcoin miners, dispensing with ambiguity about where his priorities lie – firmly with the miners and the future of the crypto industry.

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Conclusion

In the unpredictable world of cryptocurrency, Bitcoin and Ethereum, the two biggest cryptocurrencies, are somewhat struggling amidst regulatory decisions and market strategies by major players. Despite the fluctuations, cryptocurrency's transformative potential can't be ignored – its future influence on global GDP is expected to be enormous. Crypto market developments are unfolding fast – stay with us for next week's in-depth analysis.

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