The price of Bitcoin rose on Friday after Federal Reserve Chairman Jerome Powell announced that an interest rate cut was imminent. Powell emphasized that inflation was decreasing and that the Fed was becoming more attentive to the growing weakness in the labor market. Bitcoin continued its rebound over the weekend but lost that gain at the beginning of the week. It remains trading within the same long consolidation channel that has persisted for months.

In the short term, the prices of many crypto and stock assets are awaiting Nvidia’s earnings results at the bell this Wednesday. Nvidia has become the most influential stock in the global market due to its leading position in the artificial intelligence (AI) sector. The chipmaker has experienced spectacular growth thanks to the increased demand for its processors used by major cloud service providers for AI. However, Nvidia’s stock volatility has risen as investors worry about the evolution of demand. Although the company has posted impressive revenue growth in recent quarters, future earnings forecasts will be closely watched. Any indication of a slowdown in AI demand or a reduction in spending by major clients could significantly impact revenue. Analysts expect more moderate growth ahead, which could increase the pressure on Nvidia to maintain its high performance. In short, these results could indicate whether the markets will turn away from or continue to favor risk assets, directly influencing the crypto market.

What about U.S. Bitcoin ETFs? According to CoinShares, Bitcoin recorded $543 million in inflows last week, driven by favorable comments from Federal Reserve Chairman Jerome Powell, who suggested a possible rate cut. This announcement boosted investor confidence, leading to a price increase. Meanwhile, digital asset investment products saw net inflows of $533 million, marking the largest influx in five weeks. Crypto-based ETFs, particularly those offered by BlackRock, attracted significant inflows, with the United States leading, followed by Hong Kong and Switzerland. Asset managers BlackRock and Grayscale now hold nearly 3% of Bitcoin’s circulating supply through their spot Bitcoin ETFs in the United States.

BlackRock’s spot Ethereum ETF crossed the $1 billion mark in cumulative net inflows, consolidating its position as a preferred choice among investors. Launched in late July alongside products from other asset managers, the iShares Ethereum Trust ETF (ETHA) outperformed the competition, particularly Fidelity’s Ethereum fund, which attracted $367 million in net inflows. Despite the volatility of the cryptocurrency market, BlackRock’s ETF has seen no outflows since its launch, demonstrating resilience and investor confidence even during significant drops in Ethereum’s price. BlackRock’s success contrasts with the difficulties faced by some competitors, such as the Grayscale Ethereum Trust, which has seen cumulative net outflows of $2.4 billion, primarily due to higher management fees. With a fee of 0.25%, equivalent to Fidelity’s Ethereum fund and lower than Grayscale’s, BlackRock’s ETF has managed to attract numerous investors. This performance has allowed BlackRock to surpass Grayscale in terms of crypto assets under management, making BlackRock the largest asset manager in the cryptocurrency sector.

Yesterday, U.S. spot Bitcoin ETFs recorded net outflows of $127 million after eight consecutive days of positive inflows totaling $756 million. The outflows were mainly led by the Ark & 21Shares ARKB fund, with negative flows of $101.97 million, while the Grayscale GBTC fund saw outflows of $18.32 million. Meanwhile, spot Ether ETFs continued their ninth consecutive day of net outflows, with a total of $3.45 million in negative flows, despite positive inflows into Fidelity and Bitwise funds. Since January, U.S. spot Bitcoin ETFs have accumulated a total of $17.95 billion in net inflows, while Ether ETFs have seen cumulative net outflows of $481.32 million.

Nasdaq has filed a request with the SEC to list and trade Bitcoin index options, called Nasdaq Bitcoin Index Options (XBTX). These options would track the CME CF Bitcoin Real-Time Index and enable investors to manage and hedge their Bitcoin positions through options based on the underlying asset. If approved, these options would be the first cryptocurrency derivatives to be cleared by the U.S. Options Clearing Corporation (OCC). The options proposed by Nasdaq would be European-style, meaning they could only be exercised at expiration, with cash settlement based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY). This initiative aims to combine the innovation of crypto markets with the robustness of traditional financial markets, marking an important step in the development of the digital assets market. According to Sui Chung, CEO of CF Benchmarks, these options will complement existing futures and options contracts, as well as spot Bitcoin ETFs, providing investors with new ways to gain exposure to digital assets.

El Salvador continues to accumulate Bitcoin, now reaching nearly 6,000 BTC, valued at $361 million. Since March 16 of this year, the country has been buying one Bitcoin per day under the direction of President Nayib Bukele, who also transferred a large portion of this reserve into secure storage to protect the digital assets from cyber threats. Since Bitcoin became legal tender in 2021, El Salvador has launched several initiatives, including Bitcoin mining using geothermal energy from a volcano and Bitcoin-backed bonds, known as “volcano bonds.” Although these policies have drawn criticism, including concerns from the IMF and U.S. lawmakers, Bukele was re-elected for a second term, indicating continued national support for his cryptocurrency strategy.

Celsius, the bankrupt cryptocurrency lender, has repaid approximately $2.53 billion to 251,000 creditors as part of its bankruptcy proceedings. This represents about 84% of the $3 billion owed to more than 375,000 creditors. However, over 121,000 creditors have yet to claim their funds, with the majority holding only small amounts of cryptocurrency. The bankruptcy administrator continues to attempt distributions via Coinbase every two weeks and offers PayPal claim codes. Celsius filed for bankruptcy in July 2022 after pausing withdrawals, citing the need to better honor its long-term withdrawal obligations. The company has also settled significant fines with several U.S. regulators, while its former CEO, Alex Mashinsky, faces charges of financial fraud.

The suspension of Robert F. Kennedy Jr.’s presidential campaign caused confusion on Polymarket, a blockchain-based betting platform. As Kennedy announced he was withdrawing his name from ballots in key states without completely abandoning his candidacy, betting odds plummeted sharply from 99% to 6%. Polymarket users debated the resolution of the bet, with some believing Kennedy had effectively “dropped out” while others thought he was merely temporarily suspending his campaign. This uncertainty led to significant market fluctuations, with over $300,000 wagered on the outcome of his candidacy.

Bitcoin could experience an explosive phase, dubbed “batshit season,” with a price potentially reaching $150,000 by the end of 2024, according to Real Vision analyst Jamie Coutts. This term, popularized by Real Vision founder Raoul Pal, refers to a period of high volatility and rapid price increases. Coutts highlights that, historically, after local peaks in the U.S. Dollar Index, Bitcoin has set new highs within the following 365 days. If Bitcoin follows the trends of previous bull cycles, it could potentially more than double from its current price.

However, not all analysts share this optimism. The pseudonymous CryptoQuant researcher “XBTManager” warns of short-term selling pressure. He noted increased activity from short-term Bitcoin sellers, who recently transferred around 33,155 BTC, which could result in immediate selling pressure. This activity suggests that some investors are anticipating a short-term correction, especially as indicators show that short-term holders are beginning to mobilize.

According to Mike McGlone, senior analyst at Bloomberg Intelligence, Bitcoin could be in trouble despite its status as the “fastest horse” among risk assets. He notes that Bitcoin’s value relative to the S&P 500 remains well below its historical highs, currently around 11 times the stock index’s value, compared to a peak of 15 times in the first quarter of 2020. McGlone suggests that this decline could indicate a loss of momentum for Bitcoin, with a possible return to a 7x ratio relative to the S&P 500.

While Bitcoin hovers around $60,000, other analysts, like Crypto Chase, observe a consolidation phase that could signal a new trend. However, they warn that a drop to lower levels is also possible before Bitcoin reaches new all-time highs. This period of uncertainty reflects a relatively poor performance of Bitcoin compared to gold and the S&P 500, the latter reaching record highs.

The Rivemont crypto fund remains exposed to 85% Bitcoin and 15% SOL.

The presented information is as of August 28th, 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.