Bitcoin BTC Price and Other Digital Assets Rise at End of Q2 on Spot Bitcoin Euphoria

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The end of the second quarter is a good time to review the recent past of crypto markets and the way forward for the rest of the year. Enough time has passed to observe certain trends and draw extrapolations from them.

Will bitcoin and other assets go up, down, or just about stay put? BTC is currently trading at around $30,500, after surging last week. Ether is holding firm a little below $1,900. First, consider the past.

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6 healthy months for most cryptos

Here are the first and second quarter performances for half a dozen of the largest digital assets by market cap, major US stock indices, and top crypto-based stocks:

Note that Bitcoin and Ether, the cryptos with the highest values, Solana and crypto-based stocks outperformed the indices, which is no small feat given that the stocks rose from the bear market of 2022 and that much of the gains in the digital asset markets took place in the first quarter. A recent price surge following bitcoin spot deposits by BlackRock and two other financial services powerhouses ensured that bitcoin and other assets ended in positive territory for the second quarter.

Within the CoinDesk Indices CMI sectors, the smaller contract platforms led the way in the second quarter, followed by the currency sector up 55.82% and 35.06%, respectively. Digitization and IT continued to lag, dropping 84.7% and 92.03% respectively.

Bitcoin and Ether trend indicators from CoinDesks show that the two assets are in a significant uptrend phase, a result of recent price gains stemming from BTC ETF spot applications.

The correlations between the BTC and Tradfi indices have decoupled from fairly strong levels to virtually no correlation. A noticeable decline has occurred between bitcoin and the Nasdaq Composite, dropping from a correlation coefficient of 0.85 on March 31 to 0.02 currently.

Correlations vary between 1 and -1, with 1 indicating a direct price relationship, and the latter indicating an inverse relationship.

Quiet at first, then a surge

The first 74 days of the second quarter were quiet. Between April 1 and June 5, BTC fell from $28,134 to $27,173, a decline of 5%.

The more than two-month slump came amid renewed macro economic uncertainties, even as inflationary pressures continued to ease and the FOMC raised interest rates by 25 basis points (bp ). The most recent figure, the 4% inflation rate, is 50% lower than in June 2022. M2 money supply has shrunk 2.5% since January and the Federal Reserve balance sheet is 2% lower. .1% in 2023, two positive developments specific to controlling inflation. .

But the resulting price action and activity has accelerated, starting with the U.S. Securities and Exchange Commissions (SEC) lawsuit against the world’s largest crypto exchange, Binance, on May 5. June.

SEC lawsuits against Binance and Coinbase on June 6 sent prices down 7% over the next 10 days as investors worried that an increasingly prohibitive U.S. regulatory environment would weigh on stock markets. cryptography.

But then prices flipped 20% on spot BTC requests from BlackRock, the world’s largest asset manager, Invesco and WisdomTree (the last two were new deposits). The sudden appearance of BlackRock with its $9.1 trillion in assets under management sets up a caged match between an organization that has a 575-1 record for its ETF apps against an SEC that looks increasingly anti crypto.

BlackRocks’ inclusion of a surveillance sharing deal is likely key to final approval, and investors seem equally optimistic about the apps’ prospects.

Still, the success rate of BlackRocks ETF does not guarantee that its bitcoin product will be approved. The SEC has rejected several applications from high-profile companies and seems fiercely determined to treat crypto as security and curb what the agency sees as a lack of consumer protection.

For the record, the denied ETF application dates back to October 2014 when BlackRock filed for an ETF that would not require daily holdings disclosure. The company seems determined to avoid such issues of lack of transparency in its BTC spot record.

But what should investors expect for the third quarter?

August Decision on BlackRocks Application

Markets tentatively expect the first opportunity for the SEC to approve, deny or extend its deliberations on BlackRocks’ offer to occur in August. Anything other than an endorsement would likely be bearish. A rejection would likely lower BTC prices.

A so-called review extension would raise questions about a BlackRock endorsement. An extension would also follow the SEC’s model of delaying its decision only to ultimately deny a request when delay was no longer an option. A rejection at any time would likely result in lower prices.

Will altcoins return to Q1 form or pull back further?

The performance disparity between BTC, ETH, and other Layer 1 protocols is striking. And while BTC and ETH have so far avoided being labeled as securities by the SEC, the same is not true for a number of altcoins.

In many ways, regulatory clarity from the SEC may ultimately be more relevant for altcoins than for BTC and ETH. A lack of it can lead to continued decoupling as investors looking for crypto exposure stick to BTC and ETH.

Will the macroeconomic narratives subside?

A year ago, inflation was above 9%. Today, it is at 4%. Although still above the Fed’s 2% target, the speed of decline has changed the inflation narrative from can it be managed to is it time to stop hawkish monetary policy .

Going forward, the economic data points that could take more of a spotlight are employment and consumer revolving credit growth, which would impact the amount of discretionary capital available to crypto assets.

From CoinDesk’s Editor-in-Chief, Markets The Americas James Rubin, here’s some news worth reading:

STRONG START: In its opening hours on Tuesday, Volatility Shares 2x Bitcoin Strategy exchange-traded-fund (BITX), the first leveraged crypto ETF in the United States, reached over $4.2 million in volume of transactions. About $500,000 worth of shares traded in the first 15 minutes, according to Bloomberg data.

COURT REJECTS SBF: The federal judge overseeing the criminal trial of FTX founder Sam Bankman-Fried denied his pretrial motions to dismiss the criminal charges against him, writing that the exchange founder had no standing to dismiss many of these charges and had failed to meet the “extraordinary” circumstances of a dismissal.

DORSEY QUESTIONS APPLE: Former Twitter CEO Jack Dorsey, who now heads Bitcoin-focused financial services firm Block, asked Apple CEO Tim Cook via a Tweet why Apple Pay isn’t taking bitcoin after the tech device giant told Bitcoin-enabled social media app Damus it would likely be kicked out of the App Store for violating the platform’s terms of service.

FIDELITY SPOT BTC ETF: Bitcoin surged above $31,000 on Tuesday, regaining its brief perch from the previous week after crypto publication The Block reported that the financial services giant would request a bitcoin spot ETF. We are unable to confirm or share an update, a spokesperson for Fidelity Investments said in a statement to CoinDesk.

CRYPTO HUBS: Where is the best place to work in crypto? Which city has the most jobs and the friendliest regulations? The CoinDesks Crypto Hubs project scours the world to find top blockchain hubs.

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