Bitcoin Fundamental Briefing, June 2024
QUIET SUMMER
The first summer month has brought silence on crypto markets. If we take a look at BTC chart we could see that June an inside month. In fact BTC fluctuations stand in the range of May and April. After reaching of a new high we see exhausting of bullish power and raising of bearish sentiment. Now it is too few time passed and it is difficult to say whether this is big change in sentiment or just temporal short-term breath taking moment. Indirect signs , such as price fluctuation near the top without deep retracement, suggest that upside continuation is still possible. At the same time, it seems that markets are entering in some period of turbulence due to geopolitical events, domestic political events in EU and the US, tricky economical situation and muddy Central Banks policy, which bring some nervousness not only on cryptocurrencies but stock market as well – just take a look at Nvidia volatility recently.
MARKET OVERVIEW
Losses are piling up in the crypto market after its second-worst weekly decline of 2024, a reflection of cooling demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.
Bitcoin shed as much as 8.1% to $58,528 on Monday, the biggest intraday decline since April 13. The leading token by market value has been buffeted by two weeks of outflows from exchange-traded products holding the cryptocurrency. More than $210 million worth of bullish bets in crypto were liquidated in the past 12 hours, according to data compiled by tracker Coinglass.
Adding to fears of increased selling pressure, the rehabilitation trustee of Mt. Gox — the Japanese crypto exchange that was hacked more than a decade ago — announced that it would start repayments of Bitcoin and Bitcoin Cash in July.
“Given the Mt Gox announcement, it seems there are market participants positioning themselves short,” Stefan von Haenisch, head of trading at OSL SG Pte. “Crypto markets struggling to catch a bid at the moment.”
The cracks in crypto come amid doubts about the Federal Reserve’s scope to cut interest rates quickly from a two-decade high. For some analysts, the retreat in digital assets is a warning sign for broader risk appetite.
The drops in some corners are particularly notable: the run of weekly declines for Ether and Solana are the longest since last year and 2022 respectively. The 200-day moving average at about $57,500 is in focus now as a possible zone of support for the price, according to IG Australia Pty Market Analyst Tony Sycamore.
“A bearish mood seems to be setting in,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets. “The market is finding it hard to digest any large sell orders.”
Bitcoin investment products saw around $600 million in outflows for a second consecutive week, the most over a two-week period since the US approved exchange-traded funds to hold the largest cryptocurrency in January.
Overall, digital asset products were hit with $584 million in outflows in the week ended June 21, data from CoinShares International Ltd. show. Bitcoin products accounted for the majority, with $630 million in outflows coming in the wake of another $600 million the prior week.
Losses are piling up in the crypto market on Monday, a reflection of the cooling demand for Bitcoin ETFs and uncertainty over monetary policy.
“The bull run over the past few quarters has lost momentum and is in danger of failing,” said Fiona Cincotta, senior financial markets analyst at City Index. “Given Bitcoin’s finite supply, it is considered a hedge against inflation, but with inflation cooling globally back to normalized levels, Bitcoin is coming under pressure.”
Bitcoin and Nvidia Corp. just reminded investors that the market’s hottest trades are far from one-way bets. Nvidia — the poster child of the artificial intelligence revolution — slid nearly 7% and has shed about $430 billion over the last three sessions. That’s the biggest three-day value loss for any company in history.
The turbulence resurfaces the question of whether cracks in zeitgeist momentum trades point to a tougher outlook for risk appetite as the prospect of higher-for-longer interest rates hangs over markets.
ETHER ETF
The Ether token posted its best climb last week amid speculation that US regulatory scrutiny of the blockchain ecosystem underlying the second-largest digital asset may be easing. A US Securities and Exchange Commission probe around the Ethereum Foundation highlighted uncertainty about whether Ether is an unregistered security, a status that could dent demand for the digital asset.
In a posting on X, Consensys, a developer of Ethereum, said –
“the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0. The decision follows a letter we sent on June 7, asking the SEC to confirm that the May ETH ETF approvals, which were premised on ETH being a commodity, meant the agency would close its Ethereum 2.0 investigation,” Consensys added.
While Bitcoin is viewed as a commodity, the SEC argues most other tokens are unregistered securities that should be subject to its oversight. But SEC Chair Gary Gensler has been ambiguous on whether Ether is a security. Crypto enthusiasts are worried about the token — and potentially projects based on the Ethereum blockchain — falling under the agency’s tough and costly rules.
Final approval of exchange-traded funds linked to Ether, the world’s second-most popular digital asset, could come during the summer, Securities and Exchange Commission Chair Gary Gensler told lawmakers.
“Individual issuers are still working through the registration process that’s working smoothly,” Gensler said during a Thursday hearing before a Senate Appropriations subcommittee.
G. Gensler was responding to questions from Senator Bill Hagerty, a Tennessee Republican and ranking member of the Senate Appropriations Financial Services and General Government Subcommittee. “Ether needs to be approved as well, completely,” Hagerty said of the ETF applications.
Fund managers at companies including VanEck Associates, ARK Investment Management, BlackRock Inc. and Fidelity Investments would still need the SEC’s assent to make the new asset class a reality.
Investment products worldwide holding Ether saw $69 million in investor inflows in the week ended Friday, according to a report from the digital asset manager and crypto research firm.
BTC BASIS TRADING STRATEGY
Bitcoin futures are seeing a record high in net short interest among leveraged funds, yet don’t mistake that for an overwhelming sense of bearishness among hedge funds. It’s more likely due to an increasingly popular market-neutral strategy.
The basis trade has become more popular in the crypto space since spot-Bitcoin exchange-traded funds were launched in January, allowing traders to buy the ETFs and sell futures representing Bitcoin at higher levels and profit from the difference in prices.
It seems that basis trade likely accounts for much of the short interest of almost 18,000 CME Bitcoin futures contracts, according to experts.
“The popularity of the basis trade can be observed through the short interest on CME BTC futures held by hedge funds,” said Ravi Doshi, head of markets at the prime broker FalconX. “There is over $7.5 billion in net-short futures currently. In 2021, when BTC basis was significantly higher than it is now, the peak short position was only $2B.”
The rising short interest in futures coincides with a rebound in demand for the spot—Bitcoin ETFs, which collectively now hold a total of more than $61 billion in assets, according to data compiled by Bloomberg. Although this is not the driver of inflows in ETF:
The popular angle that ETF flows are offset by CME shorts is wrong,” said Vetle Lunde, senior analyst at K33 Research. “The organic directional demand is the key source behind the strong ETF flow, not traders motivated by the chunky futures premium arbitrage”
The basis was considerably more meaty from late November until mid-March, then hovering around 20% annualized apart from a short slump in February, Lunde said. Since then, the premium had hovered around 11% to 16% in the past few weeks, before dipping to about 6% at present, he added.
The bottom line for market overview is Bitcoin stands under pressure:
- Mt.Gox will distribute 143 thousand BTC in July;
- ETF Fund Outflows – Significant fund withdrawals from large ETFs such as Fidelity and Grayscale are creating selling pressure on Bitcoin;
- No new issuances of USDT and USDC – There are no new issuances in the stablecoin market, which means that there is less new money coming into the cryptocurrency market;
- In June, mining companies sold shares worth $1.8 billion. The capitulation of miners indicates that miners are selling cryptocurrency in order to cover ongoing mining costs and stay afloat. Miner income fell by 55%, forcing miners to sell more Bitcoin to cover costs.
- Bitcoin ETFs have experienced $1 billion in outflows since June 15.
- The German government sold $200 million worth of BTC.
- Data from Santiment shows that Bitcoin whales have sold more than 50,000 BTC in the last 10 days.
MARKET PREDICTIONS
A more positive US political environment for digital assets will likely help propel Bitcoin to a record $100,000 or even higher by the end the year, according to Michael Novogratz, the billionaire founder and chief executive of Galaxy Digital.
“If we take $73,000 in the next couple of weeks or so, we are going to end the year at $100,000 or higher,” Novogratz said during a Bloomberg Television interview Tuesday. “That is a good enough target. “I think we are getting skewed to the upside,” Novogratz said. “We kind of got to the finish line. DC has finally agreed in principle that crypto legislation has to happen, that should be bipartisan.”
Bitcoin (BTC) has carved out a double-top price pattern, signaling a potential bearish trend change ahead of key data release that could influence the Fed’s interest rate path.
“Technically, bitcoin appears to follow a double top formation, whereas the support level is being tested. This chart formation should be our base case unless it becomes invalidated. This formation could easily see a drop to $50,000—if not $45,000,” Markus Thielen, founder of 10x Research, said. Yes, the U.S. election and CPI should be bullish later this year, but we can still have a steeper correction,” Thielen added.
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At the same time 10 X Research forecasted the opposite just two weeks ago. On June 13th, they continued to advocate bitcoin even as the leading cryptocurrency trades under pressure following the Fed’s hawkish interest rate projections. 10x Research maintained a positive outlook on bitcoin, expressing confidence that the rally will soon resume.
“Our recommendation remains unchanged: to stick with the winners (Bitcoin) and avoid others (such as Ethereum). Our previous analysis has shown that a lower CPI number tends to lift Bitcoin prices, and we anticipate this trend will continue,” Markus Thielen, founder of 10x Research, said in a note to clients on Thursday.
The Block writes that during every cycle, long-term holders start selling their BTC as it moves to new highs. This data provides key insights into the bull market.
The selling of these holdings is shown through the collective balance of long-term holders, as indicated by the gray arrows. Typically, the balance reaches its lowest point shortly after the market peak.
In the 2017 bull market, it took around 270 days for the hodler balance to hit its lowest point, which came right after the market cycle peak. In the last bull market, the exact peak is debated. The first peak occurred 210 days after the HODLers started selling, while the second peak took place 410 days after the initial decrease in their balances.
As in previous cycles, long-term holders have started selling again. We can identify late December as the starting point. Assuming the peak occurs within a similar timeframe, we can estimate the next peak will happen within the next 140 to 260 days, or between October 2024 and March 2025.
By the IVQ of 2025, bitcoin will rise in price to $ 130,000-$150,000. This will happen if the price follows the trajectory of previous bull markets after halving, according to tech analyst and head of Factor LLC Peter Brandt.
The number of weeks from the start of each bull market cycle (the low following a 75%-plus decline) to the Halving dates has been almost equal to the number of weeks from the Halving dates to the subsequent bull market highs, as shown on the chart herein. If this sequence continues, the next bull market cycle high should occur in late Aug/early Sep 2025.
Should this tendency also continue, the high of this bull market cycle could be in the $130,000 to $150,000 range. The X on the chart marks the probably high date and price level.
The Hash Ribbons indicator gives the “optimal signal“ to buy digital gold in the coming weeks, indicating the resumption of the asset rally, according to Charles Edwards, founder of Capriole Investments. The last miners capitulation was observed in 2023, when bitcoin was trading around $20,000, Edwards added.
From the point of view of technical analysis, the first cryptocurrency is at the stage of consolidation after reaching a price maximum, the expert pointed out. In case of a new growth momentum, the next medium-term target will be $100,000. However, the situation may turn around if bitcoin closes the month below $58,000.
Standard Chartered says bitcoin could hit $100,000 ahead of US elections
“As we approach the U.S. election, I expect $100,000 to be reached and then $150,000 by year-end in the case of a Trump victory,” Geoffrey Kendrick, head of Standard Chartered Bank’s forex and digital assets research, said Thursday in an email sent to The Block. “The Biden administration recently showed pragmatism in approving the spot ether ETFs, but subsequently Biden vetoed efforts to repeal SAB 121. So Trump is still more friendly than Biden,” Kendrick added.
Kendrick added that he is sticking with his year-end price prediction of $150,000 and end-of-2025 forecast of $200,000 for bitcoin.
By the end of 2024, the first cryptocurrency will cost from $125,000 to $135,000. This opinion was expressed in an interview with Kitco News by Mike More, CEO of crypto-custodian Bingo.
In his opinion, one of the catalysts for the growth of bitcoin will be the high level of US government debt.He also noted that the US dollar is becoming weaker as a global reserve currency due to US foreign policy. The CEO of BitGo believes that the country uses the dollar as a weapon and a means for manipulation.
Richard Tang, CEO of the largest crypto exchange Binance, expressed the opinion during a conversation with Bankless that by the end of the year the price of the first cryptocurrency will overcome the level of $ 80,000.
“So, my baseline forecast for the end of 2024 was $80,000… But what I did not foresee was a strong and steady inflow of funds from institutions after the launch of the bitcoin ETF. I did not expect that the new structures would be approved so quickly, at the beginning of the year. I predict the approval of funds [based on Ethereum], perhaps towards the end of 2024 or in 2025,“ the top manager shared his thoughts.
Finally Former Goldman Sachs CEO Raul Pal predicted significant growth of bitcoin and the cryptocurrency market as a whole in the fourth quarter of 2024. The investor noted that risky assets like bitcoin usually demonstrate a rally against the backdrop of the US presidential election.
“The final quarter of the election year is a real “banana zone“ for all assets. It‘s always like that. So you know that there is an extremely high probability that everything will go completely wrong by the fall,“ Pal said optimistically.
CONCLUSION
We can’t say that June was very active month with a lot of events. Still, June shows that BTC has become sensitive again to general fundamental data on US economy and the Fed policy. After the sequence of strong data on job market, inflation, GDP and some other, the Fed rhetoric has changed which has made impact on BTC.
Now the majority of analysts and traders agree that BTC and other coins stand under pressure – We have reached the zone of pessimism. Profit supply fell by 18%, CryptoQuant writes. 
At the same time we have just few pessimistic forecasts. On average, experts suggest $95-110K area for BTC in nearest 4-6 months.
Indeed, if we take a look at our own long-term technical analysis, BTC shows tight flag consolidation near the top, with very fast CD upside leg. This is a bullish sign.
In fact, from technical point of view and for very long-term perspective, BTC will keep chances to reach new highs if even it will drop back to $20K area. Of course, this is ultimate scenario, mostly theoretical, but even drop back to $40K from technical point of view will not hurt bullish chances.
Next upside target by our view stands around $83-85K. Our weekly fundamental analysis suggests that the US should turn to dovish policy sooner rather than later by multiple reasons. Although nobody believes this but we suggest that the Fed could cut rate as soon as in July. Reasons we’ve explained in our FX weekly reports.
So, if everything stands so rosy for risky assets, where does pessimism come from? We suggest that the major risk comes from geopolitics and domestic political piking. On foreign political arena we see a new spiral of escalation everywhere. So, if something will go wrong – demand for safe haven assets is guaranteed. Which means massive sell-off on stock and crypto market. But unfortunately these risks are out of our control and totally uncertain. We could do analysis of economical data, statistics and make forecasts, but geopolitical events come unexpectedly and usually trigger miserable collapse. And we see it as a major hazard for cryptocurrencies in perspective of 3-6 months.
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Sive Morten
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