Although the cryptocurrency market experienced a broad sell-off on Monday, August 5th, investors saw this price weakness as a buying opportunity, as evidenced by the influx of $176 million into digital asset investment products last week. Indeed, the week was one of strong rebounds, with the price now flirting again with the $61,000 mark.

According to JPMorgan analysts, Bitcoin’s recent price recovery, after a drop of more than 15% during the market correction, was primarily supported by institutional investors. Contrary to the general de-risking trend observed in the markets, these investors maintained their positions in Bitcoin futures contracts, indicating persistent optimism. Bitcoin’s rebound to over $61,000 from its low of $49,000 was also favored by a bullish futures curve and positive measures such as the recommendation of Bitcoin exchange-traded funds by Morgan Stanley. Despite this recovery, JPMorgan analysts remain cautious about the cryptocurrency market. They note that positive factors, such as the stabilization of major liquidations and political support in the U.S., are already priced in. Furthermore, they emphasize that continued volatility in equity markets could still influence Bitcoin’s price.

Is Ethereum starting to recover? The cryptocurrency, which has been in free fall this summer, is finally seeing positive signs in its recently accepted ETFs. U.S.-based exchange-traded funds (ETFs) linked to Ethereum recorded $4.9 million in net inflows on Monday, marking a reversal after three consecutive days of net outflows. The Grayscale Ethereum Trust (ETHE) ended a 14-day streak of net outflows by recording no flows that day. Among other Ethereum ETFs, Fidelity’s FETH recorded $3.98 million in net inflows, while Bitwise’s ETHW attracted $2.86 million. Meanwhile, U.S.-based Bitcoin ETFs reported $27.87 million in net inflows on Monday, with Ark and 21Shares’ ARKB showing the largest inflows at $35.4 million. However, some funds like Bitwise’s BITB and Grayscale’s GBTC recorded capital outflows. These movements in ETF flows indicate continued investor confidence in cryptocurrencies despite recent market volatility.

A cryptocurrency wallet, which recently received $2 billion in bitcoin from the Mt. Gox trustee, initiated a test transaction, likely as part of the ongoing distribution of funds to creditors. According to Arkham Intelligence analysts, this wallet likely belongs to BitGo, one of the platforms responsible for distributing Mt. Gox assets. This test transaction follows a previous transfer of 33,100 BTC, valued at $2.2 billion, from a Mt. Gox cold wallet. The distribution of over 140,000 BTC and an equivalent amount of Bitcoin Cash (BCH) continues to attract significant attention from investors, due to the potential market impact if creditors decide to sell these assets after ten years of waiting.

El Salvador has announced a massive $1.62 billion investment, funded by Turkish company Yilport, to transform two of its seaports. This investment, the largest in the country’s history, will also support the development of the future “Bitcoin City,” an ambitious project for a tax-free city powered by Bitcoin mining using volcanic energy. One of the ports involved, La Union Seaport, is located near the planned site for Bitcoin City, further strengthening the necessary infrastructure for its construction. The project, which is expected to create thousands of jobs, is part of President Nayib Bukele’s vision to make El Salvador a global hub for cryptocurrencies. Although the initial funding through Bitcoin bonds has been delayed, the country has found other sources of capital to continue this project.

Coinbase recently urged the U.S. Securities and Exchange Commission (SEC) to withdraw and reconsider its proposed rule that would subject decentralized exchanges (DEXs) to the same regulations as traditional exchanges. Coinbase’s Chief Legal Officer, Paul Grewal, called this approach “irrational,” arguing that DEXs cannot comply with the same disclosure and registration requirements as centralized platforms. The rule, first proposed in January 2022 and reopened for comments in April, would expand the definition of an exchange to include DEXs, potentially requiring them to register as alternative trading systems. Grewal also cited the recent U.S. Supreme Court decision to overturn the Chevron doctrine, which he believes reduces the likelihood that courts will support the SEC’s broad interpretation of key terms. He criticizes the SEC for not explaining how DEXs could facilitate digital asset trading while complying with current rules, and warns of the high compliance costs this rule would impose on decentralized projects.

Companies like Gemini, Crypto.com, Robinhood, and Coinbase, along with influential individuals, have opposed a proposal by the U.S. Commodity Futures Trading Commission (CFTC) that could ban prediction markets, particularly those related to political events. This proposal, supported by political figures like Elizabeth Warren, aims to ban “event contracts” that allow betting on political outcomes or competitions, citing concerns about foreign interference and extremism. Opponents, including Gemini co-founder Cameron Winklevoss and Crypto.com Senior Vice President Steve Humenik, criticized the CFTC for overstepping its authority and argued that the agency should consult more with industry stakeholders before imposing such restrictions. They argue that the CFTC is not the appropriate authority to regulate these markets and that the proposal could harm innovation and Americans’ rights to access these emerging markets.

Marathon Digital Holdings, one of the world’s largest Bitcoin mining companies, has announced its intention to raise $250 million through a private convertible note offering to buy more Bitcoin. This strategy aligns with their long-term plan to retain all mined Bitcoins and acquire more on the market, thereby strengthening their position in the cryptocurrency ecosystem. However, this decision has raised concerns among experts, who fear that the company is taking excessive risks by moving away from its core mining business into speculation. Analysts like Ryan Condron of Lumerin warn of potential overextension, similar to what led Core Scientific into difficulties in 2022. Wes Levitt of Alpha Transform Holdings points out that, unlike MicroStrategy, Marathon relies heavily on Bitcoin mining, a competitive industry, which could make managing this debt more complex, especially after the halving. Other experts, like James Davies of Crypto Valley Exchange, see this initiative as a prudent balance sheet use, betting on Bitcoin’s long-term performance to outperform the contracted debt.

The Canadian cryptocurrency trading platform ezBtc and its founder, David Smillie, misappropriated approximately 13 million Canadian dollars of their clients’ cryptocurrency investments to finance personal activities, including gambling. According to the British Columbia Securities Commission (BCSC), this fraud led to significant losses for investors, preventing them from withdrawing their assets. Between 2016 and 2019, ezBtc collected over 2,300 Bitcoins and 600 Ether from its users, but nearly a third of these funds were diverted to Smillie’s personal accounts and online gambling sites. As a result, the platform was shut down in 2019, leaving investors with no way to recover their funds. Sanctions against Smillie and ezBtc are expected to be imposed by September 24, ranging from financial penalties to market participation bans.

The recent approval of a Solana ETF in Brazil has sparked speculation about the possibility of similar approval in the United States, although the timing of this approval remains uncertain. Major players like VanEck and 21Shares have already filed applications with the SEC to launch Solana ETFs, but regulatory obstacles remain. Experts point out that the absence of a robust futures market for Solana, unlike Bitcoin and Ethereum, could complicate the approval process in the United States. Additionally, Solana’s high volatility compared to other cryptocurrencies like Bitcoin may deter some investors, limiting the appeal of Solana ETFs. While the SEC’s decision remains crucial, the contrast between the cautious approach of the United States and the more open attitude of Brazil highlights the challenges ahead for the integration of Solana ETFs into the U.S. market.

According to an analysis by Glassnode, nearly 45% of the total Bitcoin supply has not moved in the past six months, indicating that many Bitcoin holders prefer to keep their assets despite market fluctuations. This shows a reluctance to sell even after Bitcoin reached a new all-time high about five months ago. Glassnode notes that this trend is particularly pronounced among “long-term holders” (LTH), those who hold their Bitcoins for at least 155 days. Despite the selling pressure observed during the last all-time high, a significant portion of these holders chooses to retain their Bitcoins, which could signal a long-term bullish sentiment. This Bitcoin retention has stabilized, and even increased, the wealth held by long-term investors, a phenomenon that stands out compared to previous periods of all-time high.

The “exchange stablecoins ratio” has reached its lowest level in 18 months. This ratio measures the amount of Bitcoin held in wallets linked to centralized exchanges relative to stablecoins, and its decline indicates reduced selling pressure on the market. This could signal a bullish sentiment where traders prefer to hold their Bitcoin in anticipation of a price increase. Bitcoin has recently rebounded to nearly $60,000 after a sharp drop below $50,000. This rebound seems promising, as a key indicator, the “exchange stablecoins ratio,” has reached its lowest level in 18 months. This ratio measures the amount of Bitcoin held in wallets linked to centralized exchanges relative to stablecoins, and its decline indicates reduced selling pressure on the market. This could signal a bullish sentiment where traders prefer to hold their Bitcoin in anticipation of a price increase. Meanwhile, the supply of the two main stablecoins, USDT and USDC, has increased by $2 billion since the market crash on August 5, reaching $150.15 billion. This increase shows a continuous influx of liquidity into the market, possibly from investors looking to buy Bitcoin at advantageous prices. Analysts remain optimistic, noting institutional support and market resilience, which could help stabilize Bitcoin’s long-term volatility.

The fund is currently composed of 85% BTC and 15% SOL.

The presented information is as of August 14th, 2024, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.