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.

Bitcoin Sales Impacting the Market

The crypto market is facing some tough times in the third quarter of 2024. One major issue is the German government’s Bundeskriminalamt (BKA) selling off a lot of Bitcoin. Since mid-June, they reduced their Bitcoin holdings from around 50,000 BTC ($3.55B) to less than 5,000 BTC ($285M) by July 11 and then to 0 shortly after. This selling is creating a supply overhang that is putting pressure on Bitcoin prices. Even though their sales aren’t huge compared to the daily trading volume of $10.6B, the way they are selling is making the market nervous.

Mt. Gox Repayments and Market Uncertainty

Another issue affecting the market is the Mt. Gox Rehabilitation Trust repayments that started on July 5. These repayments are relevant because it’s not clear how much of the repaid Bitcoin is being sold. Different exchanges process these repayments at different speeds, adding to the uncertainty. For example, Bitstamp processes immediately, while Kraken can take up to 90 days. This uncertainty is damaging to the market more than the actual selling because it creates fear and hesitation among investors.

Recession Fears and Economic Productivity

Looking ahead, there is concern that the US might fall into a recession later this year or in early 2025. Some reports suggest this slowdown could be serious. However, others believe that technological advancements, like generative artificial intelligence, will boost productivity and kickstart a new economic cycle as early as the fourth quarter of 2024. Predicting this is challenging, and opinions are divided.

Federal Reserve and Interest Rate Cuts

The US economy has shown signs of slowing down, as seen in various macroeconomic data like ISM manufacturing and unemployment rates. It’s likely that the economy peaked in the second quarter of 2024. This slowdown is one reason why many expect the Federal Reserve to cut interest rates starting in September. The recent CPI print from June, which came in lower than expected, supports this expectation. However, there is concern that if the economy does fall into a recession, these cuts may not be enough to boost markets.

Crypto Market Volatility in 3Q24

For now, the crypto market is expected to remain volatile in the third quarter of 2024. The market lacks strong narratives, and there is uncertainty about potential spot ETH ETF flows. This could mean that ETH might see some support, even if these flows take time to happen. Overall, the next two months are likely to see more volatility before things potentially improve in late September.

Takeaways from EthCC

The 7th Ethereum Community Conference (EthCC) highlighted several key themes. One major focus was on Layer-2 (L2) scaling and differentiation. Panels and discussions, including a keynote by Ethereum co-founder Vitalik Buterin, reaffirmed Ethereum’s roadmap as a secure and decentralized Layer-1 (L1) settlement layer for various L2s.

Ethereum’s Roadmap and Scaling

Ethereum aims to be a secure settlement L1, focusing on increasing data availability bandwidth for L2 storage rather than scaling its execution layer significantly. This means that while ETH’s utility is not stagnating, the execution layer won’t see major scaling changes in the near term. Instead, L2 platforms like Optimism, Base, Arbitrum, and Starknet are showcasing their unique technological and ecosystem advantages, competing rapidly due to the modular approach of Ethereum.

Interoperability Challenges

Interoperability between L2s remains a contentious issue. While there are many feasible solutions with different tradeoffs, there isn’t a dominant standard yet. Interoperability protocols must find ways to monetize adoption, making this a near-zero-sum game. Full interoperability may take months or years to establish clear standards, but this doesn’t mean it will stop user onboarding.

Improving Crypto User Experience

Account abstraction and smart account adoption are gaining momentum. Developers are focusing on simplifying the decentralized application (dApp) experience with gas abstraction and bundled transactions. Session key technology, which allows automatic transaction approval under certain conditions, shows promise in reducing user experience friction, especially in DeFi (swaps) and gaming.

Staking and Liquid Staking Tokens

Staking was another big topic at EthCC. The rising staking ratio, now at 28% of total ETH supply, and the resulting decrease in net staking APY could pose challenges for solo stakers. There are also concerns about the centralization of liquid staking tokens (LSTs). Suggestions to address these issues include lowering the base issuance curve and creating LST standards to encourage diversity and competition. Restaking faces challenges with implementation timelines and uncertainty about the significance of AVS-based yield.

Focus on Infrastructure and Consumer Apps

The main EthCC event focused heavily on infrastructure, though there were also many consumer-facing apps showcased. These ranged from AI-parsed blockchain data applications to perpetual onchain games and novel prediction markets. Despite this, the ratio of infrastructure projects to consumer apps was higher than many had hoped.

Conclusion

The third quarter of 2024 is shaping up to be a volatile period for the crypto market. Factors like the Bundeskriminalamt’s Bitcoin sales, Mt. Gox repayments, US recession fears, and Federal Reserve interest rate cuts are all contributing to market uncertainty. However, advancements in Ethereum’s roadmap, interoperability challenges, and improvements in the crypto user experience are areas of focus that could drive future growth. While volatility is expected to continue in the near term, the potential for recovery and growth remains as we approach the end of the quarter.

Survey Finds Over 80% of Crypto Investors Bullish, Believing Bull Run Continues

Introduction

Bitcoin’s recent price struggles have not dampened market sentiment, with over half of crypto investors still bullish. According to a CoinGecko survey of 2,588 respondents, 82% believe the crypto bull run isn’t over, with more than 50% suggesting it’s still in its early stages.

Crypto Bull Run is Not Yet Over

The survey revealed distinct sentiments across different roles in the crypto community. About 55.5% of investors see the bull run in its early stages, while 28.8% believe it’s in the middle. Overall, 84.3% of investors think the market green run is ongoing.

Different Views Among Market Participants

However, traders and builders are more cautious. According to the survey, 78.6% of traders and 74.9% of builders believe that the crypto bull run is not over. Unsurprisingly, market participants tagged as spectators showed the most pessimism, with only 69% believing that the bull run could continue.

Experience Levels and Market Sentiment

Meanwhile, the bullish optimism appears evenly distributed among market participants regardless of their experience levels in crypto. Per the survey, around 52.7% of those with 0-3 years of experience, 52.2% with 4-7 years, and 51.8% with 8 or more years believe the market is in the early stages of a bull run.

“In other words, having different years of crypto experience did not seem to significantly influence how participants viewed the current cycle’s bull run. Instead, there was a similar distribution of optimistic and pessimistic opinions,” CoinGecko stated.

Crypto Investors’ Bull Market Sentiment

CoinGecko pointed out that 60.4% of participants think the market hasn’t peaked and will rise again, while 21.3% anticipate a supercycle with continued gains. This suggests that Bitcoin’s over $73,000 all-time high in March could be easily surpassed in the current market cycle.

“In other words, a combined 81.7% of participants believed that the market would see a bullish continuation, either because crypto had yet to peak or had entered a supercycle state. This further reinforces the above consensus view that the current crypto bull run is not over yet and still has upside potential,” CoinGecko added.

Expert Opinions Align with Survey Results

The survey results align with those of market experts, who believe the crypto market is in the midst of a bull run. Matt Hougan, the Chief Investment Officer for asset management firm Bitwise, explained that key tailwinds could drive Bitcoin to $100,000 by year-end.

“The crypto market is facing a weird dynamic right now: All the short-term news is bad, and all the long-term news is good. The dichotomy is creating an incredible potential opportunity for long-term investors,” he commented.

Altcoin Season and Investment Opportunities

Read more: 11 Cryptos To Add To Your Portfolio Before Altcoin Season. The survey findings suggest now could be a good time to look into promising altcoins. With many experts and investors feeling positive about the future of the crypto market, adding a variety of altcoins to your portfolio might be a smart move.

Conclusion

In summary, despite Bitcoin’s recent price struggles, the overall market sentiment remains strong. The CoinGecko survey shows that a majority of crypto investors believe the bull run is not over. Different roles in the crypto community have varying levels of optimism, but overall, the sentiment is positive. Experience levels in the crypto market also do not seem to significantly affect this bullish outlook. Experts and market participants alike predict that the market has not yet peaked and anticipate further gains, with some even expecting a supercycle. This ongoing bullish sentiment suggests that the crypto market still has a lot of potential for growth.

Bitcoin Bottom Signal? German Government Runs Out of BTC to Sell

Key BTC Price Levels Emerge as Bitcoin Hits $58K on ‘Sticky’ US PPI

Bitcoin’s price hit $58,000 around July 12 when Wall Street opened. This happened as markets reacted to the “sticky” United States inflation data.

Bitcoin Joins Stocks in Positive PPI Reaction

Data from Cointelegraph Markets Pro and TradingView showed that Bitcoin’s strength improved as the Producer Price Index (PPI) print for June rose more than expected. The year-on-year PPI came in at 2.6%, higher than the expected 2.3%, and 0.1% more than the previous month.

“On an unadjusted basis, the index for final demand rose 2.6 percent for the 12 months ended in June, the largest advance since moving up 2.7 percent for the 12 months ended March 2023,” said the US Bureau of Labor Statistics.

While the July 11 Consumer Price Index (CPI) numbers showed a different story, BTC/USD avoided a downturn. Instead, it gained modestly along with US stocks while the dollar weakened.

Analyst Insights on PPI Data

Popular trader Skew noted that while prices for energy, food, and trade services were rising, the overall PPI was “sticky.” He pointed out that without these sectors, the index was “basically flat,” which was less surprising for the markets.

He observed that initial market reactions showed the US Dollar Index (DXY) and yields rising before falling again. This indicated a market shift, expecting a tough future if demand continues to weaken. He mentioned that stocks like NQ and ES might recover as hedges are removed, with end-of-day performance being crucial.

The US Dollar Index (DXY) dropped 0.35% on July 12, reaching its lowest level in over a month.

Bitcoin Order Book and Market Health

Skew described the order book on Binance, the largest global exchange, as “pretty healthy.” He noted that although the order books leaned towards buying, it was important to see this translate into actual market activity.

Higher BTC Price Daily Close Needed

Other analysts demanded a stronger BTC/USD to consider a long-term recovery. Popular trader Rekt Capital highlighted that Bitcoin needed to close above $58,350 daily to break the Lower High and aim for $60,600. He shared an explanatory chart showing Bitcoin challenging the Lower High resistance again.

German Government’s Bitcoin Holdings and Market Impact

Bitcoin’s price could be on track for a reaccumulation phase as the German government is out of Bitcoin to sell. According to Arkham Intelligence, as of July 12, 2024, the German Government (BKA) held no more Bitcoin. They had transferred their Bitcoin to major exchanges like Coinbase, Kraken, and Bitstamp, as well as to trading firms like Flow Traders and a wallet linked to B2C2 Group.

On July 12 at 15:02 UTC+8, the government continued its transfer activity, moving 1,200 BTC equally among Bitstamp, Kraken, and Coinbase (400 BTC each). They also transferred 1,000 BTC to an address suspected to belong to B2C2 Group and 500 BTC to an unmarked address. Interestingly, in two separate transfers early on Friday morning, 4,169 BTC were received back from Coinbase, Kraken, and Bitstamp, possibly due to a failed sell transaction.

These movements reduced the German Government’s Bitcoin holdings significantly from 9,094 BTC. A research note by 10x Research on Friday stated that the selling pressure from the German government is easing and Bitcoin appears technically oversold. ETFs are buying the dip, and the Fed is expected to cut interest rates soon, which could provide the liquidity support anticipated by many.

“If the Fed cuts rates solely due to inflation concerns in September 2024, it could be short-term bullish for Bitcoin. However, if growth concerns drive the cut, either in September or later, Bitcoin might face significant selling pressure,” the report stated.

MicroStrategy’s 10-for-1 Stock Split

MicroStrategy, the largest corporate holder of Bitcoin, announced a 10-for-1 stock split. The shares rose about 6% but are still 34% off an all-time high of $1,999.99, reached in March. This move comes during a lull in Bitcoin’s price, which has been stuck in a tight range for four months.

MicroStrategy’s stock split will create class A and class B common stock, aiming to make the stock more accessible to investors and employees. The shares rose about 6% but are still 34% off their all-time high of $1,999.99, reached in March.

The company plans to pay a dividend on August 1, giving shareholders an additional nine shares for every one they hold. Trading on a post-split basis will begin on August 8.

MicroStrategy started as an enterprise software provider but began aggressively buying Bitcoin in 2020. It has mainly traded as a proxy for Bitcoin’s price since then. This February, the company announced it would focus more on Bitcoin development.

Bernstein recently said that MicroStrategy is “building the world’s largest Bitcoin company” and has about 80% upside. MicroStrategy’s stock is up 106% this year compared to Bitcoin’s 38% gain, and 216% in the past 12 months compared to Bitcoin’s 91% advance.This article provides a comprehensive look at the recent developments in Bitcoin’s price and market trends. The German government’s Bitcoin sales and the latest US PPI inflation data have impacted the market. As Bitcoin navigates these events, it remains crucial to watch key price levels and market reactions.

On-chain data suggests that Satoshi’s original vision for Bitcoin is alive and kicking as the Bitcoin network is shifting towards smaller transactions.

Bitcoin P2P Payment Transfers on the Rise

Recently, there has been a noticeable increase in Bitcoin peer-to-peer (P2P) payment transfers. According to CryptoQuant founder and CEO Ki Young Ju, there is a significant pattern shift in Bitcoin transactions. More transactions are now classified as P2P payments.

Bitcoin Transaction Fees Trend

Ki Young Ju discussed the trend in Bitcoin transaction fees. Transaction fees are what senders pay to validators on the blockchain. The chart below, shared by Ju, compares median transaction fees on Bitcoin and Ethereum over the past decade.

Bitcoin vs. Ethereum Transaction Fees

The chart shows that Bitcoin’s median transaction fees were higher than Ethereum’s before 2021. However, since then, Bitcoin’s fees have generally been lower. Ju noted that contrary to popular belief, Bitcoin transaction fees have been cheaper than Ethereum’s for most of the time since 2021. Currently, the median fee on Bitcoin is around $0.40, while on Ethereum, it’s about $0.68. This means users would only use Bitcoin for larger transfers to make the fee worth it.

Filtering for P2P Payments

Considering the transaction fee rate of 1-3% in developing countries, the lower limit for a feasible transaction would be $13-40. To identify transactions likely representing P2P payments, Ju analyzed those between $40 to $1,000. The graph below shows the daily median transaction value and daily transaction count for various periods.

Bitcoin Small Transactions

The chart excludes transactions related to Runes and Ordinals protocols, as these do not represent real-life P2P payments. It shows that the median size of Bitcoin transactions was higher from 2019 to 2022 but has become smaller since 2023.

Increase in Bitcoin Transactions

Not only have transaction sizes become smaller, but the number of transactions has also increased. This suggests many small moves are happening, likely due to real-life P2P payments. Ju believes this trend indicates that Bitcoin is developing in the right direction, aligning with Satoshi’s original vision.

Bitcoin’s Adherence to Satoshi’s Vision

While some might think Bitcoin hasn’t lived up to Satoshi Nakamoto’s vision, the data suggests otherwise. Bitcoin is becoming more suitable for small P2P payments, showing that it is developing as intended.

BTC Price and Market Trends

Currently, Bitcoin’s price is around $57,800. Despite recent market fluctuations, the increase in small P2P transactions is a positive sign for Bitcoin’s future. This trend indicates growing adoption of Bitcoin for everyday transactions, staying true to Satoshi’s vision of a peer-to-peer electronic cash system.

Conclusion

In summary, on-chain data shows that Bitcoin is shifting towards smaller, peer-to-peer payments. The trend in transaction fees, the increase in small transactions, and the overall development of the Bitcoin network suggest that Satoshi Nakamoto’s vision is still alive. Bitcoin is evolving into a practical mode of payment for everyday use, aligning with its original purpose.

This rise in P2P transactions is a promising sign for Bitcoin’s future, indicating its growing use in real-life scenarios. As Bitcoin continues to develop, it is likely to see even more adoption as a peer-to-peer payment system.