Weekly Pulse #17: June 24th – 30th

Mark Vermeulen, 5 min read
Last Updated: 1 July, 2024

Cryptocurrency market

Last week was an eventful one for the crypto market, with Bitcoin and major altcoins seeing wild swings driven by a raft of factors. Beyond the price action, there were noteworthy developments on the adoption, regulation, and innovation fronts as well.

Bitcoin Faces Resistance Near $63K

Bitcoin had a rollercoaster week, unable to sustainably break out above $60k. It plunged to $58.8k on Monday as the market grew cautious about significant selling pressure on the horizon.
The immediate trigger was Mt. Gox announcing it would start repaying creditors close to $9 billion in Bitcoin and Bitcoin Cash from July. The liquidation of such a massive trove risked crashing the market.
Adding to the headwinds was the US government sending nearly 4,000 seized Bitcoins worth over $240 million to Coinbase. Speculations were rife that government agencies might dump the coins in the open market.
Moreover, on-chain data showed Germany continuing to offload Bitcoin, moving around $60 million worth to exchanges during Tuesday and Wednesday.
Amid the bearish undercurrent, Bitcoin staged a remarkable recovery after Monday’s flash crash. Its ability to rapidly bounce back above $60k demonstrated strong investor confidence. By Friday, it was trading around $61k as dip buyers emerged.
Still, Bitcoin faces formidable resistance around the $63k to $68k range. It needs a decisive breakout to ignite the next leg towards its all-time high near $69k.

Race for a Solana ETF Heats Up

One of the most intriguing developments last week was asset manager VanEck filing for a Solana exchange-traded fund (ETF). Investment firm 21Shares also submitted a Solana ETF application soon after.
The filings argue that Solana is more akin to a crypto commodity rather than an unregistered security. Hence it should be cleared for an ETF like what happened with Bitcoin and Ethereum futures ETFs.
However, the path forward for a Solana spot ETF still remains muddy. The SEC earlier labeled Solana as a security in its lawsuit against Coinbase. Moreover, Solana does not have a derivatives market like the CME Bitcoin and Ethereum futures that existing crypto ETFs are based on.
Nonetheless, the applications set the stage for a Solana ETF pending evolving regulatory conditions. The SEC’s stance could soften under new leadership or if Solana establishes a healthy futures market.
The clamor for Solana ETFs from prominent asset managers evidences surging institutional appetite. Investment vehicles would expand Solana’s investor base significantly just as they did for Bitcoin and Gold ETFs earlier.
Thus the Solana ETF filings are noteworthy even if approvals don’t seem imminent currently. They signal the widening mainstream embrace of crypto beyond just Bitcoin and Ethereum.

Stripe Deal Expands Crypto Payments Access

The week brought some promising adoption developments, like Coinbase and payments processor Stripe announcing a collaboration.
As part of it, Coinbase Wallet users can purchase crypto assets using credit cards, Apple Pay, and bank transfers through Stripe. The integration helps expand crypto access and utility among mainstream consumers.
Additionally, later this summer, Stripe merchants will be able to accept stablecoin payments, starting with USDC. While Stripe discontinued crypto support in 2018 citing bottlenecks, its renewed interest underscores the progress in infrastructure.
The partnership can significantly boost real-world crypto usage by leveraging Stripe’s vast customer base of online businesses and platforms.

Ethereum ETF Prospects Look Bright

The likelihood of a spot Ethereum ETF being approved in the US keeps improving after last week’s developments.
The SEC continues to review several filings for an Ethereum ETF, with chairman Gary Gensler suggesting the evaluation process is advancing well. Many industry observers believe 2023 could finally be the year an Ethereum ETF goes live.

The expanding range of ETF applications highlights the growing appetite for regulated crypto investment vehicles catering to institutional investors. More funds flowing from mainstream finance can significantly propel broader adoption.

DeFi Protocols Underwhelm Despite Spurts

The total value locked (TVL) across all DeFi protocols remains subdued despite pockets of strength. The overall TVL stands around $74 billion, less than half of the $180 billion peak seen 11 months back.
DeFi lending activity witnessed an uptick last week, with Aave’s TVL rising above $6 billion from below $5 billion a week back. MakerDAO also hit multi-month highs in TVL at $7.2 billion as of Friday.
However, trading activity has lagged, with top DEX Uniswap’s weekly volumes dropping under $4 billion recently. Furthermore, total volumes on DEXs have receded over 60% from their 2021 peak.
While DeFi user growth continues rising, metrics around activity and liquidity point to protocols struggling to recover to last year’s heights during this bear market.

Layer 1s Jostle for Market Share

Competition among Ethereum challengers and “ETH killers” remains intense as chains vie for developer mindshare and users.
Alternative layer 1s like Solana, Polkadot, NEAR Protocol, and Optimism posted double-digit gains last week even as Bitcoin traded choppy. Such outperformance highlights investors hunting for bargains and rotatiing into high-upside plays.
Various data feed into the narrative too. For instance, Solana surpassed Ethereum for all-time NFT sales last week, underscoring its momentum on that front. Meanwhile, Polkadot and NEAR Protocol are seeing surging development activity as per tracker Santiment.
That said, Ethereum remains firmly entrenched as the market leader both in terms of development and adoption. Still, its market share faces growing risks unless Eth2 progress accelerates.

Legacy Markets

Markets Eye Inflation Data, Debate Fallout After Volatile Quarter

Major US stock indexes ended the week on a positive note, regaining some ground after a volatile second quarter punctuated by swirling recession fears. The S&P 500 rose over 3% on the week, paring losses for the quarter to just above 4%. The tech-heavy Nasdaq posted a modest quarterly advance, supported by artificial intelligence and chip stock rallies earlier in the spring.

Investors are now watching for US inflation figures that could back the case for less aggressive Fed tightening. Consumer price data has shown some signs of peaking, though core prices remain stubbornly high. Traders see about a 60% chance of a 50 basis point rate hike at the July meeting, down from near certainty a few weeks ago.

Greenback Holds Near Highs After Fiery Debate

The US dollar index traded near an eight-month peak versus major peers, firming up 0.3% on the week. The greenback hit a two-decade high earlier in June as anxieties over a potential global downturn burnished its safe-haven appeal. Tuesday’s presidential debate, where former President Donald Trump put in a combative performance against the more subdued President Biden, added to investor unease over the administration’s ability to pass further legislation ahead of midterm elections.

Treasuries Pull Back on Growth Bets, Curve Flattening Continues

Long-dated Treasury yields bounced off three-week lows Friday, though still nursed sharp quarterly declines. Yields have tumbled amid worries over an economic slump, signs of peaking prices and expectations for less aggressive Fed tightening. The policy-sensitive 2-year/10-year yield curve flattened to near two-week lows below minus 5 basis points, highlighting concerns over near-term growth. Another section of the curve inverted further, with some analysts seeing curve distortions signaling recession risks ahead.

Asian Stocks Climb on China Optimism; India Bonds Eyed

Asian shares booked modest weekly gains despite ongoing growth fears. Sentiment steadied after Chinese President Xi Jinping pledged measures to meet economic goals in the second half of the year through infrastructure spending and relaxed oversight of tech companies. Meanwhile, India’s bond market is bracing for heavier foreign inflows as JPMorgan Chase & Co. adds the country’s debt to its influential emerging markets index this year.

Corporate Spotlight: Nike Swoosh Lower, FedEx Surges

Athletic apparel giant Nike saw its shares plunge as its full-year outlook widely missed Wall Street forecasts, triggering analyst downgrades and tanking stocks across the sector. Delivery giant FedEx led markets higher early Friday after posting better-than-expected quarterly results and improved guidance, having cut costs and boosted efficiencies under its new CEO. French cosmetics maker L’Oreal slipped over 5% on the week after downgrading the global beauty market growth outlook based on China lockdown impacts.

Base Metals Shine on Supply Issues; Crude Rangebound

Industrial metals scored broad gains last week on prospects for tighter supply amid resurgent Chinese demand. Zinc touched a three-week peak as low inventories and production curbs in top consumer China boosted prices. Nickel and aluminum also rallied, while copper held near a 16-month low on global slowdown worries. Crude oil traded in its tightest band since October 2020, with recession risks offsetting tighter inventories. Gold steadied following recent declines, remaining on track for a third straight quarterly advance.

Mark Vermeulen

A native of the Netherlands with a degree in finance, Mark has emerged as an avid crypto enthusiast and expert. His dedication to blockchain technology and bitcoin adoption has made him the driving force behind the Dutch content of Ecoinomy. Mark's adventure began during college, where his passion for decentralized finance quickly caught his eye. His ability to simplify complex concepts around crypto has earned him prestige among Dutch investors and far beyond.