Market Update
Since the last weekly update, the digital asset class has continued its decline, with Bitcoin dipping as much as 10.7% from 65.5k to 58.5k. However, it has since rebounded to our anticipated trading support range of $61-64k USD. We believe we are likely to stay within this range in the short term before a potential breakout above $64k USD.
Despite the overall weakness in altcoins, they outperformed Bitcoin this week, decreasing Bitcoin's market dominance from 52.7% to 50.89%. The last significant drop in Bitcoin's dominance by over 2.5% was in late May when Ethereum ETFs were approved, which resulted in a strong altcoin run up.
BTC Technicals:
Funding Rates - The funding rates on both ByBit and Binance turned negative for the second time this year on a daily time scale. Negative funding rates do not last long and historically indicate that Bitcoin may be oversold and has hit a local low.
Premiums - The premium on Binance and Bybit, which reflects the difference between the futures price and the spot price, is still negative, confirming the current bearish sentiment.
Open Interest - Open interest, which measures the total number of outstanding derivative contracts took a dip as long positions were liquidated, however they are still high indicating strong market participation.
Total Liquidations
German Government Selling + Mt Gox
News came in that Germany has started selling its substantial Bitcoin holdings, seized from a movie piracy website, raising concerns about market volatility. The German government has recently sold $220 million in Bitcoin of there $3.05 billion in custody, and plans to continue the liquidation, potentially impacting Bitcoin's price and market stability.
Repayments to former users of Mt. Gox, the exchange that lost 850,000 Bitcoins in 2014, are set to begin in July 2024. The repayments are set to be made in Bitcoin (BTC) and Bitcoin Cash (BCH) which magnified the fear and bearish sentiment in the market.
Bitcoin Weekly Price Chart
Ethereum Strength
Despite the broader market's large declines, Ethereum has shown strength during this heightened volatile period, only down 5.5% this week . This is largely due to the anticipation of Ethereum ETFs, which are set to launch in July. Analysts suggest that these ETFs could be about a week away, with Bitwise predicting $15 billion in net flows in the first 18 months. We expect this inflow of investors and institutional money to to drive Ethereum's ecosystem and price to record highs.
Ethereum Weekly Price Chart
U.S. Bitcoin ETFs
The US Bitcoin ETFs have seen their seventh straight day of outflows, tying its previous record for consecutive withdrawals. The confirmation of repayments to Mt. Gox creditors caused large outflow pressure with ETFs losing $174 million. ETF volume has been declining over the past few months since the surge in March. However, in the past seven trading days, ETF volume exceeded $10 billion.
Furthermore on a more bullish view, VanEck has filed Form 8-A for a spot Ether ETF, indicating that Ethereum ETFs could be just a week away.
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