Bitcoin Price Tops $67,000: Highest in Over a Month

Bitcoin, the leading cryptocurrency, has reached a new high, topping $67,000 on Friday. This marks a 5.7% increase, making it the highest price in over a month. The price surge comes ahead of a significant week for the crypto market, with former President Donald Trump set to promote Bitcoin in Nashville.

Surge in Other Cryptocurrencies

Not only did Bitcoin see a rise, but other leading cryptocurrencies like Ethereum and Solana also experienced gains. Ethereum increased by 3.9% to $3,500, while Solana saw a 9.2% jump to $170. The crypto market is buzzing with excitement as spot Ethereum ETFs are expected to start trading next week.

Increase in Crypto Market Liquidations

As Bitcoin’s price surged, the crypto market saw an increase in liquidations. Many traders who expected prices to fall faced significant losses. According to CoinGlass data, $54.1 million in long positions were liquidated, with a total of $95 million in rekt trades positioned toward the downside. This indicates that many traders were caught off guard by the sudden price increase.

Factors Behind Bitcoin’s Price Rally

The exact cause of Friday’s rally isn’t clear. However, we believe several factors are at play. For one, rate cut expectations and a decrease in market fears as possible reasons for the price surge. Another that the big drivers of lower prices recently have been Germany’s Bitcoin liquidations and Mt. Gox FUD (fear, uncertainty, and doubt). With these issues being resolved, the price is due to rise.

Germany’s Bitcoin Liquidations and Mt. Gox Repayments

Germany’s recent selling of seized Bitcoin seems to have stopped last week as the country’s digital reserves ran out. This has removed a significant supply overhang from the market. Additionally, Mt. Gox creditors are expected to finally receive repayments from the failed Bitcoin exchange within the next seven to 14 days. These repayments have been anticipated for a long time and could bring more stability to the market.

Impact of Federal Reserve Rate Cuts

Another key factor that might be driving the rise in Bitcoin’s price is the increasing certainty around rate cuts from the Federal Reserve. According to our analysts, there is a 98% chance that the U.S. central bank will cut rates in September. This expectation is almost guaranteed by CME traders and could be a significant reason for the recent price increase.

Donald Trump and Bitcoin

Former President Donald Trump has become more Bitcoin-friendly recently. He is now positioning himself as a crypto-friendly candidate as he aims to become America’s leader again. Trump has said, “We want all remaining Bitcoin to be made in the USA,” on his social media platform, Truth Social. This shift in stance has attracted millions of dollars in cash and digital asset donations from Silicon Valley tech leaders.

Bitcoin’s Recent Performance

Bitcoin’s recent price increase comes after a challenging period. Earlier this month, the price dipped as low as $54,000. However, it has risen by 3% on a monthly basis and surged over 18% in the past two weeks. This indicates a strong recovery and a positive trend for the largest cryptocurrency by market capitalization.

Wall Street’s Reaction

While Bitcoin’s price has been on the rise, the mood on Wall Street has been less optimistic. The tech-heavy Nasdaq Composite and S&P 500 both fell by 0.6%, and the Dow Jones Industrial Average dropped by 1%. This contrast highlights Bitcoin’s unique position in the financial market.

Upcoming High-Profile Week

Investors are also looking forward to a high-profile week ahead. Former President Donald Trump is set to appear at a Bitcoin conference in Nashville next week. Analysts believes this event could be very positive for Bitcoin, bringing more attention to the asset. He even expects all-time highs for Bitcoin as the presidential election approaches.

Conclusion

Bitcoin’s price topping $67,000 is a significant milestone, marking the highest price in over a month. With gains in other cryptocurrencies like Ethereum and Solana, increased liquidations, and factors such as Germany’s Bitcoin liquidations and Mt. Gox repayments coming into play, the crypto market is seeing substantial activity. The Federal Reserve’s expected rate cuts and former President Donald Trump’s newfound support for Bitcoin are also contributing to the current bullish trend. As Bitcoin continues to recover from its recent lows, the upcoming week promises to be an exciting time for the crypto market.

In recent days, Bitcoin has been the subject of intense scrutiny among analysts predicting its next price move. The consensus among experts is that Bitcoin could soon reach $77,000, marking a significant milestone in its current bull cycle. To validate this potential rally, Bitcoin must first surpass its previous all-time high of $73,700.

Technical Analysis and Bullish Signals

Technical charts reveal a bullish pattern known as a bull flag, characterized by two upward rallies separated by brief retracements. This pattern typically indicates continued upward momentum for Bitcoin. Analysts interpret these signals as positive indicators for Bitcoin’s price trajectory, suggesting a strong likelihood of reaching $77,000 in the near term.

Key Resistance Levels and Support

Despite these optimistic forecasts, Bitcoin faces substantial resistance at the $65,000 mark. This level has become a critical indicator for crypto analysts, representing a significant hurdle that Bitcoin must overcome to sustain its upward momentum. On the other hand, historical all-time highs serve as essential support and resistance zones, with the $73,700 level being a crucial benchmark for confirming further price increases.

Impact of ETF Inflows on Bitcoin’s Price

Recent data indicates a substantial influx of funds into US spot Bitcoin ETFs, totaling $422 million on July 16 alone. These inflows have been instrumental in driving Bitcoin’s price rally, underscoring the growing influence of ETF investments in the cryptocurrency market. Analysts estimate that ETFs accounted for approximately 75% of new investments in Bitcoin when it surpassed the $50,000 mark earlier this year.

As analysts anticipate continued growth in Bitcoin’s price, a significant catalyst lies in the expected inflows into Bitcoin ETF funds in the coming weeks. These ETFs have been pivotal in recent price movements, with substantial investments pouring in since early July, culminating in a notable $422 million influx on July 16 alone. This surge in ETF activity underscores a growing institutional interest in Bitcoin, as these funds offer a regulated and accessible avenue for large-scale investors to enter the cryptocurrency market.

The projected increase in ETF inflows could further propel Bitcoin towards the $77,000 mark, as outlined by bullish forecasts. Such inflows not only inject liquidity into the market but also signal confidence among institutional investors in Bitcoin’s long-term viability as a store of value and potential for substantial returns. Analysts suggest that if these trends persist, Bitcoin could see sustained upward momentum, potentially surpassing key resistance levels like $65,000 and the previous all-time high of $73,700.

Moreover, the influx of funds into Bitcoin ETFs reflects broader market sentiments and economic conditions, indicating a favorable environment for cryptocurrency adoption and investment. As regulatory frameworks continue to evolve to accommodate digital assets, ETFs serve as a crucial bridge between traditional finance and the burgeoning crypto market, offering investors diversified exposure and regulatory oversight.

The expected ETF inflows into Bitcoin ETF funds present a promising outlook for the cryptocurrency’s price trajectory, with potential growth avenues opening up amidst increasing institutional participation and market confidence.

Forecast for Bitcoin’s Future Movements

Looking ahead, analysts are closely monitoring ETF inflows as a key determinant of Bitcoin’s future price movements. The uptick in ETF investments since July 5 has bolstered confidence in Bitcoin’s ability to maintain its upward trajectory. Should this trend continue, Bitcoin could potentially reach the $69,000 mark as the next significant milestone before aiming for $77,000 and beyond.

Conclusion

In conclusion, Bitcoin’s price outlook remains optimistic amidst bullish technical signals and significant ETF inflows. As it continues to navigate key resistance levels and historical price highs, the cryptocurrency market anticipates further upward movement towards the coveted $77,000 mark. With ETFs playing a pivotal role in shaping Bitcoin’s price dynamics, investors and analysts alike are closely monitoring these developments for insights into future market trends.

Introduction

Since July 5, Bitcoin has seen net inflows of $1.91 billion into its US spot exchange-traded funds (ETFs). Despite this, its price has struggled to stay above $65,000. Understanding why this is happening involves looking at several factors in the financial markets and how they affect Bitcoin (BTC).

Arbitrage Trading and Bitcoin ETFs

One reason Bitcoin’s price isn’t rising despite the surge in ETF inflows is arbitrage trading. Some investors buy spot ETFs not to hold Bitcoin long-term but to use these shares for other financial trades. Hedge funds, in particular, use arbitrage strategies to profit from market inefficiencies without betting on price movements.

For example, the cash and carry trade involves selling Bitcoin futures while buying the equivalent spot ETF position. This means they aren’t necessarily betting on Bitcoin’s price going up.

Hedge Funds and Arbitrage Trades

Major hedge funds like Millennium Management, Schonfeld Strategic Advisors, Jane Street, HBK Investments, Susquehanna International, and Bracebridge Capital are involved in these arbitrage trades. These funds don’t typically hold Bitcoin long-term or believe strongly in its value. Instead, they focus on making profits from market differences.

The Chicago Mercantile Exchange (CME) Bitcoin futures open interest, which measures the total active contracts, is currently $10.2 billion, up 23% from the previous week, according to CoinGlass data. This suggests many hedge funds are looking to profit from the premium on BTC futures contracts, currently at an annualized rate of 11%.

Spot Bitcoin ETF Buyers and Market Impact

Not every spot Bitcoin ETF buyer is betting on BTC price upside. Some buyers might have shifted away from spot positions for tax reasons or to use shares as collateral for traditional finance trades. The increase in CME’s BTC futures open interest partially explains the limited impact of the spot ETFs net inflow. Even though these funds eventually cover their futures market short positions, the market impact is neutralized by the sale of the spot BTC position.

Influence of Traditional Finance Markets

Bitcoin’s underperformance isn’t linked to traditional finance markets. On July 16, the S&P 500 index reached an all-time high, and gold, considered the world’s largest reserve asset, traded at a historical high on July 17. These events show that Bitcoin’s challenges are unique to its market.

Decreasing Demand for Inflation Hedges

Another factor is the drop in demand for inflation hedges. Bitcoin is often seen as a hedge against inflation because of its fixed supply. However, US inflation is decreasing, and US Treasurys are strengthening, showing confidence in the Federal Reserve’s strategy.

The US Treasury 5-year yield fell to 4.07% on July 17 from 4.43% on July 1, indicating higher demand for these bonds. Investors accept lower yields for these safe assets or expect lower inflation ahead. This trend is unfavorable for Bitcoin, which is an alternative store of value.

Bitcoin’s Appeal and US Economic Confidence

Bitcoin’s main appeal lies in its predictability and independence due to its hard monetary policy and decentralized network. This narrative is stronger when central banks struggle, such as with a collapsing currency or lack of trust in the government’s ability to repay debt.

However, as US inflation drops and confidence in the economy grows, Bitcoin’s appeal as a store of value weakens. Positive macroeconomic data, like a strong US economy, can negatively impact Bitcoin’s price, even with spot ETF inflows.

Institutional Investors and Bitcoin’s Price

Institutional investors play a significant role in Bitcoin’s price dynamics. Hedge funds engaged in arbitrage trades are not typical long-term holders. Their strategies include using BTC futures contracts and spot positions to profit from market inefficiencies.

These funds are also influencing the CME Bitcoin futures market. The increase in open interest and the annualized premium rate indicate that many institutional investors are involved in trading BTC futures. This activity affects Bitcoin’s price movement, making it challenging to rally above $65,000.

Conclusion

In summary, Bitcoin’s price struggles despite the surge in spot ETF inflows due to several factors. Arbitrage trading, decreasing demand for inflation hedges, and the influence of traditional finance markets all play a part. Hedge funds using arbitrage strategies and the overall confidence in the US economy also impact Bitcoin’s price.

Understanding these dynamics helps explain why Bitcoin’s price isn’t rising as expected, even with significant inflows into spot ETFs. Investors and traders need to consider these factors when analyzing Bitcoin’s market behavior and future price movements.

Crypto Markets See Bitcoin Price Dip

Recently, the crypto markets have gone through a tough time. Bitcoin and other cryptocurrencies saw their prices fall sharply. This drop, known as a dip, was partly because the German authorities sold a lot of seized Bitcoin. This caused a lot of liquidations, which means many people sold their Bitcoin quickly. But not everyone panicked during this dip.

Big Players Buy Bitcoin During Dip

While many were selling, some big players in the market took advantage of the lower prices. An on-chain researcher noticed that Binance, one of the largest cryptocurrency exchanges, increased its Bitcoin reserves. Binance added 41,000 Bitcoins to its existing 580,000 BTC reserves. This move happened during the dip when many were panic-selling. Interestingly, Binance had made a similar move earlier in the year.

During the same time, other exchanges like Bitfinex and Upbit also bought more Bitcoin. Bitfinex added around 13,000 BTC, and Upbit added 5,000 BTC to their reserves. This data shows that the Bitcoin balance across centralized exchanges (CEXs) is growing. Usually, this means there is a higher selling pressure in the market.

Whales Are Bullish on Bitcoin

It is not just exchanges that are buying Bitcoin. Large individual investors, known as whales, were also accumulating Bitcoin. Whales were buying Bitcoin at their fastest rate since April 2023. Ki Young Ju, the founder of CryptoQuant, a major provider of on-chain and market data analytics, noted this trend. According to him, whales accumulated 85,000 BTC over the last 30 days. Some estimates say whales bought 71,000 BTC within the last week. These purchases were partly at the expense of ETF holdings.

On July 5, the whales bought over 47,000 BTC at an average price of $57,000. Meanwhile, smaller traders were selling during the dip. Ki Young further suggested that most of the current selling volume in the market can be absorbed by the over-the-counter (OTC) market.

German Bitcoin Sales and Market Impact

The way the German authorities sold their Bitcoin is also interesting. Instead of using a specialist broker, they sold the funds directly on the retail market. After weeks of small transfers, the government quickly accelerated the sales. By July 12, the German government had completely emptied its Bitcoin wallets.

The timing of these sales was also questioned. Around the same time Germany started selling, the Mt.Gox exchange was preparing to repay its debtors. This added more selling pressure to the market, pushing prices down further.

Smart Moves by Binance and Other Buyers

Some people believe that Binance and other buyers made a smart move by purchasing Bitcoin during the dip. They bought Bitcoin at a lower price, which might not be seen again. Others say that these big buyers helped stabilize the market and support Bitcoin prices. Despite this support from institutional investors, it is clear that retail traders still play a big role in shaping the market with their trading patterns.

Bitcoin Price Recovery and Future Predictions

Since the dip, Bitcoin has significantly recovered. At the time of writing, Bitcoin has reached $63,000. Some experts even predict that Bitcoin could reach a new all-time high (ATH) by the end of this month. “We are about to experience the longest bull run ever,” said another expert from CryptoQuant.

The number of wallets holding at least 10 BTC has been increasing this month. This also shows a generally bullish sentiment in the market. More and more investors are holding onto their Bitcoin, expecting prices to go higher.

Summary

In summary, the recent dip in Bitcoin prices saw different reactions from various market players. While many smaller traders sold their Bitcoin, big players like Binance, Bitfinex, and whales took the opportunity to buy more. The actions of these institutional investors and whales indicate a bullish sentiment in the market. Despite the selling pressure from events like the German Bitcoin sales and Mt.Gox repayments, the market has shown signs of recovery. As Bitcoin prices rise again, there is optimism that we may see new all-time highs soon.

Stripe Expands Crypto Purchasing into the European Market

Introduction

Stripe, a major online payments company, is now making it easier for people in Europe to buy cryptocurrencies like Bitcoin, Ether, and Solana using their credit or debit cards. This expansion into the European market is a big step for Stripe, which was founded by Irish brothers Patrick and John Collison. Stripe aims to simplify everyday transactions involving virtual assets.

Cryptocurrency Integration in the EU

Stripe’s new move allows European shoppers to purchase various cryptocurrencies using their regular payment methods, such as credit or debit cards. This is part of Stripe’s ongoing effort to make cryptocurrency more accessible for everyone. With this new service, buying Bitcoin, Ether, and Solana has become much simpler for people in the European Union.

Targeting Crypto Marketplaces and Vendors

Initially, this expansion is aimed at crypto marketplaces and vendors. Recently, Stripe announced that it would support stablecoin payments, where transactions are quickly settled and automatically converted into non-crypto currencies like euros or dollars. This helps vendors manage their finances more easily and reduces the complexity of dealing with cryptocurrencies.

New Features for Online Vendors

Stripe is also introducing a new feature for online vendors: a crypto-purchasing widget. This widget can be added to their websites, allowing customers to buy cryptocurrencies directly from the site. Stripe will handle all the technical issues, including charges, disputes, and regulatory responsibilities related to Know Your Customer (KYC) requirements. This means vendors can focus on their business without worrying about the complexities of crypto transactions.

High Cryptocurrency Ownership in Ireland

Ireland is one of the leading countries in Europe in terms of per-capita cryptocurrency ownership. This new service by Stripe will make it easier for Irish and other European consumers to buy cryptocurrencies quickly and easily. According to John Egan, head of crypto at Stripe, this expansion allows crypto companies to better serve European customers.

Benefits for Merchants

With Stripe’s new services, merchants using the company’s onramp can optimize conversions, verify identities, and prevent fraud more effectively. This helps them reach a more global audience, allowing them to grow their businesses and provide better service to their customers. Stripe’s tools make it easier for businesses to navigate the challenges of selling crypto online.

Stripe’s Global Presence

Stripe is jointly headquartered in Dublin and San Francisco and is one of the largest online payment companies in the world. Thousands of major ecommerce firms use Stripe for their payment processing needs. In 2023, Stripe handled over $1 trillion in payments, which is a 25% increase from the previous year. This shows the company’s significant impact on the global payment industry.

Financial Growth and Investment

Earlier this week, Stripe’s valuation rose to $70 billion (€64.2 billion). This increase followed a major investment from Sequoia Capital, one of Silicon Valley’s biggest venture capital firms. Sequoia Capital agreed to buy up to $861 million (€790 million) in private shares from other investors. This investment reflects confidence in Stripe’s growth and future potential.

The Vision of Patrick and John Collison

Stripe was founded by Patrick and John Collison, two brothers from Limerick, Ireland. Their vision was to create a payment system that would simplify online transactions for businesses and consumers. Over the years, Stripe has grown into one of the most influential companies in the fintech industry, constantly innovating and expanding its services to meet the needs of a global market.

Simplifying Cryptocurrency Transactions

Stripe’s expansion into the European crypto market is part of its broader mission to make financial transactions easier for everyone. By allowing people to buy cryptocurrencies using their credit or debit cards, Stripe is breaking down barriers and making it more convenient for people to invest in virtual assets. This move is expected to boost the adoption of cryptocurrencies in Europe.

Stablecoin Payments

Stablecoin payments are a key part of Stripe’s new offering. These payments settle quickly and are automatically converted into non-crypto currencies, such as euros or dollars. This makes it easier for vendors to manage their finances without worrying about the volatility of cryptocurrencies. Stablecoins provide a more stable and predictable way to handle transactions, which is beneficial for both merchants and consumers.

Importance of KYC and Regulatory Compliance

Handling KYC (Know Your Customer) and regulatory responsibilities is a critical aspect of Stripe’s service. By taking care of these issues, Stripe ensures that all transactions are compliant with legal requirements. This reduces the risk for vendors and helps prevent fraud. Stripe’s focus on regulatory compliance is a major advantage for businesses that want to offer crypto purchasing options without dealing with complex legalities.

Growing the Crypto Market in Europe

Stripe’s expansion into the European market is expected to have a significant impact on the crypto industry. By making it easier for people to buy cryptocurrencies, Stripe is encouraging more people to invest in virtual assets. This will likely lead to increased adoption and growth of the crypto market in Europe.

Conclusion

Stripe’s move to expand its cryptocurrency purchasing services into the European market is a major step forward. By allowing people to buy Bitcoin, Ether, Solana, and other cryptocurrencies using their credit or debit cards, Stripe is making it easier for everyone to participate in the crypto economy. This expansion is expected to boost the adoption of cryptocurrencies in Europe and help businesses grow by reaching a more global audience. With its new features and focus on regulatory compliance, Stripe is well-positioned to lead the way in the evolving world of digital finance.

Larry Fink, CEO of BlackRock, Comments on Bitcoin

Larry Fink’s Changing Views on Bitcoin

Larry Fink, the CEO of BlackRock, the world’s largest asset manager, recently shared his thoughts about Bitcoin, the biggest cryptocurrency in the world. During an interview with CNBC, Fink talked about his changing views on Bitcoin and its potential role in global portfolios.

Once skeptical about Bitcoin, Fink admitted that his opinion has evolved over the years. He said, “I studied it, I learned about it. And then I said, okay, my idea five years ago was wrong.” Now, he sees Bitcoin as a legitimate financial instrument offering potentially uncorrelated returns.

Bitcoin as an Investment Tool

Fink suggested that Bitcoin could be a good investment for people worried about countries running excessive budget deficits and devaluing their currencies. He mentioned, “I believe this is a tool you can invest in when you are more afraid.” This means that Bitcoin can be a hedge against economic instability.

He also highlighted Bitcoin’s potential to provide financial control for individuals in countries where daily life can be intimidating. “I believe there are countries where you fear for your day-to-day existence and have the opportunity to invest in something that is beyond your country’s control,” Fink said.

The Role of Bitcoin in Portfolios

Larry Fink sees an important role for Bitcoin in investment portfolios. He believes it will become one of the asset classes that investors look at. “I am one of those who believe there is a role for Bitcoin in portfolios,” he stated. He even referred to Bitcoin as “digital gold,” suggesting it could act as a hedge against the optimistic mood around the world.

Fink concluded his remarks by emphasizing the industrial use of Bitcoin, which he believes many people ignore. “And I believe there’s a great industrial use for it. And I think a lot of people overlook that,” he said.

JP Morgan Predicts Bitcoin Market Rebound

JP Morgan’s Bullish Stance on Bitcoin

American multinational finance company, JP Morgan, has maintained a positive outlook on Bitcoin’s price despite recent bearish trends. The bank has announced when it expects the ongoing BTC liquidations to end, predicting a strong bull market afterward.

Timeline for BTC Liquidations and Market Recovery

In a research report released on Wednesday, JP Morgan suggested that BTC liquidations should abate in July. They foresee the start of a strong bull market as bearish trends caused by sell-offs subside. While the bank believes that a market recovery is imminent, it is also skeptical about the sustainability of high Bitcoin inflows into crypto assets.

For instance, JP Morgan has revised and grossly reduced its former year-to-date crypto net flow from $12 billion to $8 billion. So far this year, Spot Bitcoin ETFs have been the major driver for substantial inflows into the crypto market.

Reasons for Bitcoin’s Market Fluctuations

JP Morgan’s skepticism also stems from Bitcoin’s high price relative to its production cost and the price of gold. A crypto analyst from the bank, Nikolaos Panigirtzoglou, suggested that the bank’s reduction in the estimated year-to-date net flow was also due to the recent decline in Bitcoin reserves across exchanges.

The decline in Bitcoin reserves over the past month is believed to be a result of ongoing selling pressures and widespread BTC liquidations executed by Mt Gox creditors and the German government. As mentioned earlier, JP Morgan has predicted that this BTC sell-off will officially end in July, giving rise to a substantial bullish rally for Bitcoin in August.

Optimism Among Crypto Analysts

Following JP Morgan’s predictions, many crypto analysts and community members have suggested that the recent upsurge in Bitcoin’s price is the continuation of a strong bull market. The outlook remains positive as investors look forward to a rebound in the Bitcoin market.

Conclusion

Larry Fink, CEO of BlackRock, has made significant comments about Bitcoin, highlighting its role as a legitimate financial instrument and a hedge against economic instability. He also pointed out the potential industrial uses of Bitcoin, which are often overlooked.

Meanwhile, JP Morgan predicts a positive future for Bitcoin, expecting the current market liquidations to end soon and a strong bull market to begin. With Spot Bitcoin ETFs driving significant inflows into the crypto market, the anticipation of a market recovery grows.

As Bitcoin continues to evolve, its role in global portfolios and its potential as an investment tool remain topics of interest for investors and financial experts alike. The changing views of leaders like Larry Fink and the predictions from financial giants like JP Morgan suggest a promising future for Bitcoin in the world of finance.

Introduction

The Russian Ministry of Finance has proposed allowing licensed exchanges, such as the Moscow Exchange and the Saint Petersburg Exchange, to offer digital currency trading services to select qualified investors. Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets, believes that Russia’s largest exchanges are ready for cryptocurrency trading. He emphasized that once the legal framework is established, the exchanges will be able to quickly and seamlessly start trading cryptocurrencies.

Ministry of Finance Proposal

The Ministry of Finance of the Russian Federation suggests that companies from the register of exchanges and trading systems conduct organized trading of digital currency but open it only to a limited circle of “particularly qualified” investors. This proposal is contained in the draft government review prepared by the ministry at the end of June on two parliamentary bills: one on the regulation of cryptocurrency mining (N237585-8) and the other on settlements in digital currency within the framework of an experimental legal regime (N341257-8).

International Settlement Mechanisms

Developing a mechanism for the use of cryptocurrency in international settlements is a directive from Prime Minister Mikhail Mishustin. This directive was given at the end of 2022 to the Ministry of Finance, the Central Bank, Rosfinmonitoring, the Federal Tax Service, and the FSB. Currently, a bill is before the State Duma that gives the Central Bank the right to start creating an experimental platform for the use of cryptocurrencies in international settlements starting September 1, 2024.

Legal Framework and Regulation

In its review of this bill, the Ministry of Finance notes that digital currency settlements for foreign trade participants can be allowed within the framework of general regulation rather than special regulation. To do this, digital currency needs to be recognized as a currency value. Additionally, the ministry proposes, as an experiment, to allow Russian exchanges and trading systems to trade digital currency for a narrow group of investors, recognizing digital currency as a commodity in this context.

Recognizing Digital Currency as a Commodity

The proposal suggests considering within the general regulation the possibility of recognizing digital currency as a currency value and allowing foreign exchange operations with digital currencies, including using digital currency as a means of payment under foreign trade contracts. It also proposes establishing special regulation for organized digital currency trading, recognized as a commodity, based on an exchange or trading system license for a limited circle of “particularly qualified” investors.

Trading Digital Currency on Russian Exchanges

Thus, it is proposed to allow digital currency settlements for all foreign trade participants and to restrict the purchase of digital currency on Russian exchanges to a narrow circle of investors within the framework of the experiment. Currently, the Central Bank’s register of licensed exchanges and trading systems includes seven companies: “Moscow Exchange,” “SPB Exchange,” Saint Petersburg International Commodity and Raw Materials Exchange (SPIMEX), Saint Petersburg Currency Exchange (SPCEX), “Eastern Exchange,” “National Commodity Exchange,” and “CTS Exchange.”

Infrastructure for Cryptocurrency Trading

Previously, Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, stated that the largest Russian exchanges have the infrastructure to immediately start servicing cryptocurrency flows. “Our Moscow Exchange and SPB Exchange, the Saint Petersburg Commodity Exchange (SPIMEX), they are already actively working on this. I mean mastering the market, how to set up the corresponding work (…), if only the legal conditions are created for their work, they will immediately join the process. Therefore, I do not think there will be any problems with this,” said the deputy earlier, responding to a question about how the prime minister’s directive on developing a joint position of ministries on the introduction of international settlements in digital currencies will be implemented in the absence of domestic crypto exchanges in Russia.

Comprehensive Regulation Approach

Since 2022, the Ministry of Finance has consistently advocated for comprehensive regulation of digital currencies and even prepared a bill that would legalize crypto exchanges in Russia. However, consensus with the Central Bank was not reached, so a different path was chosen – conducting an experiment, i.e., using digital currencies for international transactions within experimental legal regimes. The Central Bank agreed with this idea but continued to oppose the legalization of cryptocurrency settlements within the country.

Experimental Legal Regimes (EPR)

In September last year, Ivan Chebeskov, director of the Financial Policy Department of the Ministry of Finance, expressed doubts about the need to test the use of cryptocurrency in export settlements through experimental legal regimes (EPR), as the idea is almost a year old, and “all experiments have been practically passed” during this period. “Honestly, we prefer a comprehensive approach without any experimental regimes because how long can we experiment; the whole country is already engaged in this. I think we already understand the results of this experiment,” said Chebeskov.

Current Legislation and Grey Zone Regulation

According to current legislation, Russian residents cannot settle in cryptocurrency, and the organization of cryptocurrency circulation in Russia is in a “grey zone,” while buying cryptocurrency on foreign exchanges is not prohibited. The date for the consideration of both bills (on the regulation of mining and cryptocurrency circulation for foreign trade) in the State Duma has not yet been determined. They were included in the plan for June but were not considered.

Bitcoin and Ether Lead $17.8B Crypto Inflows

Record-Breaking Crypto Inflows

Bitcoin and Ether have led the way in a massive $17.8 billion inflow into digital asset investment products this year. This is a new record, showing that the crypto market might be starting to recover. Just last week, cryptocurrency investment products saw $1.44 billion in inflows.

Bitcoin’s Big Week

Bitcoin had its fifth-largest week of inflows ever, bringing in over $1.35 billion. This huge amount helped Bitcoin’s price bounce back above the $60,000 mark. At the same time, short Bitcoin-related products saw their biggest outflows since April 2024, with over $8.6 million leaving these investments.

Ethereum’s Strong Performance

Ether, the cryptocurrency for Ethereum, had the second-largest inflows after Bitcoin. Ether saw over $72.1 million in inflows last week. Many investors are excited because the first spot Ethereum ETFs in the US might start trading soon. These ETFs are waiting for the final approval from the Securities and Exchange Commission (SEC).

Year-to-Date Inflows

So far in 2024, inflows into digital asset investment products have hit over $17.8 billion. This beats the previous record of $10.6 billion set in 2021. Most of these inflows are from buyers in the United States, but Switzerland, Hong Kong, and Canada have also seen significant investments in digital assets.

Regional Inflows

According to CoinShares data, the US led with $1.3 billion in inflows last week. Switzerland also bought a record amount of digital assets, with $58 million in inflows. Hong Kong and Canada followed with $55 million and $24 million, respectively.

Factors Influencing Bitcoin Inflows

Last week’s dip in Bitcoin’s price was partly due to the German government selling Bitcoin. This price drop, along with lower than expected Consumer Price Index (CPI) numbers in the US, encouraged many investors to buy more Bitcoin.

Ethereum ETF Anticipation

The anticipation of the first spot Ethereum ETFs in the US has driven significant inflows into Ether. Several issuers, including VanEck and 21Shares, have filed for these ETFs and are awaiting the SEC’s final approval. If approved, these ETFs could start trading in the next few weeks.

Inflows by Asset

Bitcoin and Ether are leading the inflows, but other digital assets are also seeing significant investments. The positive sentiment is not just limited to these two cryptocurrencies; it extends to the entire digital asset market.

Impact of Short Bitcoin-Related Products

Short Bitcoin-related investment products experienced their largest weekly outflows since April 2024, totaling over $8.6 million. This suggests that investors are less interested in betting against Bitcoin and are more confident in its price going up.

Institutional Inflows

Institutional investors are a major driver of these inflows. Large institutions are buying significant amounts of digital assets, showing their growing confidence in the crypto market.

Conclusion

In conclusion, Bitcoin and Ether have led to a record-breaking $17.8 billion in inflows into digital asset investment products this year. With Bitcoin hitting its fifth-largest weekly inflow and Ether seeing strong inflows ahead of the US Ether ETFs, the crypto market shows signs of recovery. The inflows are largely driven by US-based buyers, but other regions like Switzerland, Hong Kong, and Canada are also making significant investments. This trend suggests that both retail and institutional investors are becoming more confident in the future of digital assets.

Introduction

A recent study examined how retail investors trade cryptocurrencies compared to traditional assets like stocks and gold. The study focused on the price volatility of cryptocurrencies and the different investment strategies that investors use. Unlike traditional markets, cryptocurrency trading is mainly done by retail investors. This study used data from eToro, a large international retail discount brokerage, to understand these trading behaviors.

Study Setup

The study analyzed data from 200,000 individual retail accounts on eToro from 2015 to 2019. eToro allowed trading in both cryptocurrencies and traditional assets, providing a unique setup to compare trading behaviors while keeping individual preferences constant. By focusing on both asset classes, the study aimed to uncover any distinct patterns and strategies that investors employ when trading in these new and traditional markets.

Trading Strategies

The study found a significant difference between how investors trade cryptocurrencies and how they trade stocks and gold. Retail investors tend to sell stocks and gold when prices rise, but they hold onto their cryptocurrency investments even after large price changes. This suggests that investors follow a momentum-like strategy in cryptocurrencies, while they are contrarian in stocks and gold.

Momentum-Like Strategy in Cryptocurrencies

In the context of cryptocurrencies, a momentum-like strategy means that investors tend to buy more when prices are rising and hold onto their investments even during significant price increases. This behavior contrasts sharply with traditional asset trading, where investors typically sell when prices rise to lock in profits. The study showed that even during large price movements, retail investors did not actively rebalance their cryptocurrency portfolios, indicating a strong belief in the long-term value and potential of these assets.

Contrarian Strategy in Stocks and Gold

For stocks and gold, the study found that investors generally adopt a contrarian strategy. This means that they sell assets when prices increase and buy when prices decrease, expecting a reversion to the mean. This behavior is consistent with traditional investment wisdom, where buying low and selling high is the goal. The study’s findings suggest that retail investors apply this traditional strategy to stocks and gold but not to cryptocurrencies.

Key Findings

1. Investor Behavior: Investors hold onto cryptocurrencies despite large price swings, indicating a momentum-like strategy. In contrast, they actively rebalance their portfolios by selling stocks and gold when prices rise.
2. Consistent Across Investors: The same investors exhibit different trading behaviors for different asset classes, suggesting that the behavior is asset-specific and not due to individual characteristics.
3. Attention and Fees: The study ruled out inattention and trading fees as primary reasons for these differences. Investors actively manage their stock portfolios but not their cryptocurrency holdings.

Detailed Analysis of Investor Behavior

The study provided a comprehensive analysis of investor behavior, focusing on how different strategies are applied across asset classes. By analyzing trading data, the researchers were able to identify distinct patterns that highlight the unique nature of cryptocurrency trading.

Consistency Across Investor Demographics

The study’s results were consistent across different investor demographics, including age, gender, and financial experience. This consistency suggests that the observed trading behaviors are not driven by specific types of investors but are instead related to the characteristics of the asset classes themselves.

Data Analysis

The study focused on the 200 most traded stocks and the three most traded cryptocurrencies (Bitcoin, Ethereum, and Ripple) on eToro. It examined day-to-day changes in the total portfolio share of these assets. By grouping data into cohorts, the researchers reduced noise and better analyzed trading behaviors.

Methodology

To ensure accurate results, the study used a rigorous methodology that included regressing the logarithm of the day-to-day change in the total portfolio share of a given asset on both contemporaneous and lagged returns. This approach allowed the researchers to control for various factors and isolate the effects of trading strategies on portfolio performance.

Cohort Level Analysis

Grouping data by cohorts based on characteristics such as age, income, and trading activity helped reduce noise and provided a clearer picture of trading behaviors. This method is similar to sorting individual stocks into characteristic portfolios in asset pricing tests, which is commonly used to reduce the impact of idiosyncratic noise on parameter estimates.

Potential Explanations

Several factors were considered to explain why investors follow a momentum-like strategy in cryptocurrencies:

1. Lack of Experience with Crashes: Before 2018, investors had not experienced a major cryptocurrency crash. Even after the 2018 crash, investors did not change their momentum-like strategy.
2. Lottery-Like Assets: The study examined if investors treat lottery-like assets differently but found only a small effect.
3. Cash Flow Information: Unlike stocks, cryptocurrencies do not provide regular cash flow news, which might affect how investors update their beliefs about prices. Investors trade contrarian around stock earnings announcements but not in cryptocurrencies.
4. Trading Fees: Higher trading fees for cryptocurrencies might make investors hold their positions longer, but the study found that fees are not the primary reason for the observed behavior.

Lack of Experience with Crashes

The first major cryptocurrency crash occurred in early 2018, when Bitcoin’s price fell by about 65% over four months. The study analyzed trading behavior before and after this crash to determine if the experience changed investor strategies. Surprisingly, the momentum-like strategy remained unchanged even after this significant price drop, suggesting that investors’ beliefs about the long-term value of cryptocurrencies were not shaken.

Lottery-Like Assets

Cryptocurrencies are often compared to lottery-like assets due to their high volatility and potential for huge returns. The study investigated whether this characteristic influenced trading behavior. While there was a small effect, it was not significant enough to explain the overall momentum-like strategy observed in cryptocurrency trading.

Cash Flow Information

Regular cash flow information, such as earnings announcements for stocks, provides investors with opportunities to reevaluate their beliefs about an asset’s value. The study confirmed that investors trade contrarian around these announcements, but this dynamic is not present in cryptocurrencies, which lack regular cash flow news. This absence may lead investors to rely more heavily on price movements to inform their trading decisions.

Trading Fees

Cryptocurrency trading often incurs higher fees than stock trading, which could theoretically influence investors to hold their positions longer to offset these costs. However, the study found that trading fees were not a primary factor in the observed differences in trading strategies. For example, even when eToro removed trading fees for stocks in some countries, there was no significant change in trading behavior.

Conclusion

The study demonstrated that retail investors use different models for updating their price expectations for cryptocurrencies compared to stocks and gold. While they adopt a contrarian strategy for stocks and gold, they follow a momentum-like strategy for cryptocurrencies. This behavior is consistent across different types of investors and is not driven by individual characteristics, inattention, or trading fees. Instead, it appears that investors believe that positive returns in cryptocurrencies increase the likelihood of future adoption, leading to an amplification effect in prices.

Implications for Investors

Understanding these distinct trading behaviors can help investors make more informed decisions when trading different asset classes. Recognizing the momentum-like strategy in cryptocurrencies may encourage investors to adopt more diversified and balanced approaches to their portfolios, potentially mitigating the risks associated with extreme price volatility.

Future Research

The study opens the door for further research into the unique characteristics of cryptocurrency markets and their impact on investor behavior. Future studies could explore the long-term effects of market maturation on trading strategies and whether these momentum-like behaviors persist as the market evolves.

Final Thoughts

The insights gained from this study highlight the importance of considering the unique attributes of different asset classes when developing investment strategies. By understanding how retail investors trade cryptocurrencies differently from traditional assets, investors and financial advisors can better navigate the complexities of modern financial markets and make more strategic investment choices.

Introduction

Spot Bitcoin ETFs have recorded their highest daily inflow in over five weeks, signaling renewed investor interest and confidence in the digital asset. On July 12, these ETFs attracted $886.75 million, underscoring a growing interest among investors in Bitcoin as a digital asset.

What Are Bitcoin ETFs?

Background on Bitcoin ETFs

Bitcoin exchange-traded funds (ETFs) are investment funds that hold Bitcoin and allow investors to buy shares representing a portion of the cryptocurrency. This financial instrument provides a way for investors to gain exposure to Bitcoin without needing to hold the cryptocurrency directly, simplifying the investment process.

Key Players in the Market

Several prominent financial institutions are leading the market in Bitcoin ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) are among the top ETFs, with significant inflows recorded. These products have made substantial contributions to the overall inflows, reflecting their popularity and trust among investors.

Why Are Bitcoin ETFs Gaining Popularity?

Factors Driving the Inflows

The inflows into Bitcoin ETFs can be attributed to several factors, including increasing regulatory clarity, institutional adoption, and growing recognition of Bitcoin’s potential as a hedge against inflation. The approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) has also played a crucial role in boosting investor confidence.

Comparison with Other Assets

Recent data from Bitcoin brokerage firm River indicates that Bitcoin ETFs are gaining traction faster than traditional assets like gold ETFs. In the first quarter of 2024, more professional firms invested in Bitcoin ETFs compared to gold ETFs, highlighting a shift in investment preferences.

What Does This Mean for the Market?

Market Implications

The substantial inflows into Bitcoin ETFs suggest a positive outlook for Bitcoin and the broader cryptocurrency market. As more investors seek exposure to digital assets, the demand for Bitcoin ETFs is expected to grow, potentially driving up the price of Bitcoin.

Future Outlook

With the increasing adoption of Bitcoin ETFs, market analysts predict further growth in this sector. Continuous regulatory support and the entry of more financial institutions into the Bitcoin ETF market are likely to sustain this upward trend.

Why This Is Important

This surge in inflows indicates strong investor confidence in Bitcoin and its associated financial products. It reflects the growing acceptance of Bitcoin as a legitimate investment asset, providing more opportunities for both retail and institutional investors.

Possible Implications

• Increased legitimacy and acceptance of Bitcoin in traditional finance.
• Potential upward pressure on Bitcoin prices due to higher demand.
• Enhanced interest from institutional investors and financial firms.

Coins to Follow

Bitcoin (BTC) and Ethereum (ETH) are among the top-performing cryptocurrencies associated with ETFs. These digital assets are likely to see increased interest and investment as the popularity of Bitcoin ETFs grows.

What to Follow

Investors should keep an eye on regulatory developments related to Bitcoin ETFs, performance and inflow trends of major Bitcoin ETFs, and market reactions and price movements of Bitcoin and other cryptocurrencies.