Market Highlights
- Recession fears, weak U.S. jobs data, and geopolitical tensions led to a downturn in both traditional and crypto markets
- The Bank of Japan's rate hike strengthened the yen and caused major stock market drops.
- Bitcoin and Ethereum are down 18.6% and 25.9%, respectively, on the week.
- Jump Crypto has liquidated over US$300 million worth of staked Ethereum.
- Russia has legalised the use of cryptocurrency for international settlements.
Markets Overview
Macro Market Updates:
Analysts attribute the recent drop across the crypto and traditional finance markets to weak US jobs data, Jump Crypto’s liquidation of staked Ether positions, the Central Bank of Japan raising interest rates and subsequent drop in the Topix and Nikkei 225, the US and Russia’s recent crypto changes, and the uncertainty of the impending US presidential election. The drop was so severe in the Topix (the Tokyo stock price index measuring the prices of Japan’s largest companies) that a trading halt happened for around ten minutes. The Topix and Nikkei 225 are down around 20% from the 11 July 2024 highs.
Crypto Market Sectors:
In crypto, staking services and the Bitcoin ecosystem experienced the deepest losses. The declines in staking services are presumably due to investors deleveraging and the wider downturn in the DeFi sector due to the impacts of Jump Crypto’s liquidation of wstETh. The Bitcoin Ecosystem likely experienced steep declines due to the fall in bitcoin’s price, increasing mining difficulty and sustainability issues with Bitcoin layer-2 rollups.
Bitcoin
Bitcoin, among other cryptocurrencies, experienced a double-digit drop this week amid a market-wide sell-off.
Starting the week around US$70,000, bitcoin declined below the key level at US$60,000 and continued down towards US$52,000. According to CoinGlass, most of the bitcoin positions being liquidated are long. This indicates that the market was perhaps expecting a bottom around these levels before continuing the next leg upwards to post new all-time highs.
Bitcoin asset investment products saw outflows of US$400 million. It’s the first week of outflows after five consecutive weeks of inflows.
While the steep declines this week may be unsettling, it’s important to note that pullbacks are normal in a bull market. Further, bitcoin is still bullish, like much of the crypto market this year. Bitcoin started 2024 at US$43,697, meaning it’s up 25% this year. The S&P500, in comparison, is up just over 9% for the year to date. And the last time the US Federal Reserve cut interest rates in April 2020, bitcoin began its historic run from US$8,000 to US$64,000 over the 12 months that followed.
Bitcoin is currently trading at US$54,688, a decrease of 18.6% on the week.
Ethereum
Ethereum also had a tough week. Price started with resistance at the key level of US$3,355, which coincided with resistance at the 50-day moving average. From here, Ethereum fell over 35% to around US$2,115.
Jump Crypto’s liquidation of staked Ether positions added further downside pressure. The crypto trading arm of Jump Trading, a trading firm with a focus on algorithmic and high-frequency trading, has moved over US$300 million of staked Ether from hot wallets to exchange wallets. Other investors noted that Jump Crypto seems to be in the process of redeeming more than US$500 million of Lido’s wstETH into ETH — a process that started on 25 July 2024, two days after the US Securities and Exchange Commission (SEC) approved spot Ethereum exchange-traded funds (ETFs).
Ethereum investment products saw outflows of US$146 million. The net outflows since the launch of spot Ethereum ETFs in the US currently sit at US$430 million.
Despite Ethereum’s weak price action this week, the second-biggest cryptocurrency by market cap is up almost 8% in the year to date.
Ethereum is currently trading at US$2,450, a decrease of 25.9% on the week.
Altcoins
DeFi pullback
- Radiant Capital (RDNT) lost 49.5%, reducing its market cap to US$62.5 million. The losses for the omnichain money market built on LayerZero are presumably due to the wider market downturn this week, and the network’s wstETH rewards likely being impacted by Jump Crypto’s ongoing liquidation of its wstETH.
- Pendle (PENDLE) declined by 48.6%, taking its market cap to US$325.3 million. Like other decentralised finance (DeFi) networks this week, Pendle has been heavily impacted by the wider market declines. Given that Pendle’s protocol focuses on yield trading and allows users to fix or leverage their yield, the losses may have compounded as users de-leverage. Despite this week’s losses, Pendle reached its second largest maturity event on 25 July, when US$1 billion in value held on the network matured. Pendle has facilitated US$918 million in redemptions since.
- Orca (ORCA) lost 47.5%, reducing its market cap to US$83.1 million. This follows recent weeks of strong growth, as Orca shared good news in its treasury report. Similar to other DeFi protocols that rely on liquidity to generate yield and fees, the Solana marketplace was impacted by wider moves in the market. Orca’s team had its debut appearance on the Solana ecosystem call this week, demonstrating it's a respected player in the ecosystem, regardless of the current price action.
In Other News
Digital asset investment products saw net outflows of US$528 million this week. The outflows are due to the wider market sell-off across crypto and traditional finance market asset classes amid recession fears and geopolitical uncertainty. The largest outflows were seen in the US, where US$531 million left funds. Trading volume for the week totalled US$14.8 billion — just 25% of the typical volume seen in a week.
- Two days after former US President Donald Trump said at the 2024 Bitcoin Conference that, if elected, he’d create a strategic bitcoin stockpile, the US Government moved US$2 billion of seized bitcoin from Silk Road to a new wallet. It’s unclear whether the government will sell the bitcoin. Some are outraged at the fact that the bitcoin might be sold. Others took to ‘X’ to remind people that the US Marshals Service (USMS) awarded a contract to Coinbase in July to manage and dispose of large-cap crypto assets, suggesting the seized bitcoin may have been moved to be managed and stored, rather than sold.
- The US SEC amended a complaint in its high-profile case against Binance this week. The amendment seeks to remove allegations that Solana, Cardano, and Polygon are unregistered securities. While it doesn’t mean the entire case will be dropped, it represents a positive development. The allegation and arguments likely would have proceeded as is had the SEC thought they could win the case by continuing to argue that certain cryptocurrencies are unregistered securities.
- The Hong Kong-based online brokerage, Futu Securities International, has started offering crypto trading services to retail clients. After receiving a license upgrade from the Hong Kong Securities and Futures Commission, Futu Securities began offering retail clients the ability to trade bitcoin and Ethereum with Hong Kong dollars or US dollars.
Regulatory
- Russian lawmakers passed a bill to legalise the use of cryptocurrency for international settlements. The development appears to be a way for Russia to trade across borders despite sanctions imposed by Western countries. The law is expected to come into force in September. Under the new bill, cryptocurrency in Russia will be governed by similar regulations enforced for foreign currency. At the start of the Ukraine war, Russia imposed a blanket ban on crypto before allowing it to be trialled by financial services firms for specific use cases.
- US Senator Cynthia Lummis introduced a bill to the Senate to create a strategic US bitcoin reserve. First outlined at the Bitcoin 2024 conference in Nashville, Senator Lummis introduced the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act of 2024” to strengthen "the position of the US dollar in the global financial system." Some crypto experts say the Act will have a better chance of passing after the US Presidential election on Tuesday, November 5, 2024.
In case you missed it...
We're excited to launch our new Refer a Friend program at Caleb & Brown! Now, you can earn extra dollars simply by sharing your unique referral code from the Caleb & Brown Portal.
How It Works: Refer a Friend rewards you based on the number of trading clients you refer. The more friends you invite, the higher your tier and the more you earn!
Reward Tiers: 🥉 Bronze: Refer 1-4 clients and earn 2% of their trading fees. 🥈 Silver: Refer 5-14 clients and earn 3% of their trading fees. 🥇 Gold: Refer 15-24 clients and earn 4% of their trading fees. 👑 VIP: Refer 25 or more clients and earn 5% of their trading fees.
Why Refer?
- Exclusive Rewards: Increase your earnings as you refer more friends.
- 24/7 Support: Your referrals receive expert guidance from our personal client managers.
- Trusted Partner: Join a network of 29,000 satisfied clients from over 100 countries.
Start sharing your referral code today and watch your rewards grow!
Join the Program! *Terms & Conditions apply
Disclaimer: This assessment does not consider your personal circumstances, and should not be construed as financial, legal or investment advice. These thoughts are ours only and should only be taken as educational by the reader. Under no circumstances do we make recommendation or assurance towards the views expressed in the blog-post. The Company disclaims all duties and liabilities, including liability for negligence, for any loss or damage which is suffered or incurred by any person acting on any information provided.
