Bitcoin as an International Asset – Market Info

Over the past two weeks, the total market capitalisation exceeded €1.06 trillion. The decrease in market capitalisation over a 14-day period is 1.85%. The price of Bitcoin has fallen by 2.85 % over the last 14 days to a current value of over €27,200. Bitcoin’s dominance is currently around 49.9 %.

Source: Coinmarketcap

Bitcoin as an International Asset

Bitcoin price growth and renewed positive sentiment across the cryptocurrency market has been heavily influenced in recent weeks by the request to launch a bitcoin spot ETF by BlackRock, the world’s largest institutional asset manager. Despite still being a non-existent investment product for now, the interest from BlackRock as well as other major investment companies means that Bitcoin is slowly but surely becoming a respected international asset.

This is exactly what Larry Fink, CEO of BlackRock, thinks, and in an interview with Fox Business he stated that he believes Bitcoin’s role is largely to digitise gold and also democratise finance. Fink also said that investors are likely to turn to Bitcoin in the future as a tool to protect against inflation and devaluation of domestic currencies in various countries.

Perhaps the most interesting part of the entire interview, however, was when the head of the world’s largest asset management company, which manages nearly $10 trillion in assets, stated that Bitcoin is, in his view, “an international asset that is not built on or dependent on any other currency.”

It is very interesting to see how Larry Fink’s opinion of cryptocurrencies and Bitcoin has changed over the years. Just a few years ago, Fink was highly critical of Bitcoin, claiming that it was used mostly for illegal activities and that there was no chance for Bitcoin to succeed. Today, however, things are very different, and BlackRock has changed its opinion by 180 degrees and is looking to launch the first spot BTC ETF fund in the US. Source

Fed Chair Shares Bullish Sentiment on Crypto

Jerome Powell, the chairman of the US Federal Reserve, which is responsible for the monetary policy of the United States and which decides, for example, on changes in the key interest rates, made headlines in the world’s leading magazines a few days ago for his comments on the crypto market.

During a congressional hearing, House of Representatives member Warren Davidson highlighted concerns about the long-term viability of cryptocurrencies in the US economy. Davidson pointed out that the market capitalisation of cryptocurrencies in the US is approximately $1.1 trillion and asked Jerome Powell what he thought about the long-term viability of cryptocurrencies. In response to this question, Powell stated that he believes cryptocurrencies have some “staying power” and expressed his belief that cryptocurrencies are demonstrating sustainability as an asset class within the US.

The term “staying power” is viewed in financial markets as the ability of an investor to hold onto their investment and not sell it even if the value of the investment decreases. Powell’s statement thus suggests that he believes cryptocurrencies are sustainable and relevant in the long term. Source

Vanguard Group Increased Its Stake in Mining Companies

Asset management firm Vanguard Group, the world’s second-largest institutional asset manager with more than $7 trillion in assets under management, has increased its holdings in mining companies Marathon Digital and Riot Blockchain, according to a filing with the US Securities and Exchange Commission (SEC).

According to disclosure documents, Vanguard has increased its stake in mining company Marathon Digital by 60% from 10.9 million to 17.5 million shares since February. Vanguard also increased its stake in Riot Blockchain by 18% from February and now owns a total of 17.9 million shares.

Shares of Marathon (MARA) are currently trading at roughly $17.47, bringing Vanguard’s stock value to $305.73 million. Shares of RIOT are trading at 17.28, and the value of Vanguard’s stake in Riot Blockchain is around $313.97 million. Thus, the value of Vanguard’s shares in the two mining companies cumulatively exceeds $619 million.

As recently as two years ago, the Vanguard Group stated on its website that the potential for investing in cryptocurrencies was very weak from their perspective over the long term, and that cryptocurrencies were a speculative asset with no intrinsic value rather than a suitable investment vehicle for long-term investment. However, now everything is different, and Vanguard has become the largest shareholder in mining company Marathon Digital and is expanding its presence in the cryptocurrency sector. Source

Presidential Candidate Tends Towards Bitcoin

Robert F. Kennedy, the candidate for the presidency of the United States, has already made several positive statements on the topic of Bitcoin and cryptocurrencies and has promised that if he becomes president, he will introduce laws in the US that will be friendly to the cryptocurrency market. The latest information regarding Kennedy has revealed that the candidate himself has some Bitcoins in his possession.

According to a financial disclosure report, the Kennedy family held as much as $250,000 in bitcoin as of June 30. This information was a bit surprising, as Kennedy attended a Bitcoin conference in Miami in May of this year, where he stated that he does not currently own any Bitcoin. However, he also added at the time that he would be accepting donations in Bitcoin for his campaign.

Kennedy’s presidential campaign manager Dennis Kucinich said the BTC purchase occurred in the aftermath of the speech and before the June 30, 2023 financial disclosure deadline.

Kennedy made some interesting points on the subject of cryptocurrencies in his campaign remarks. For example, he said that should he become president, he would support Bitcoin and freedom of trade and allow individuals to manage their assets in their own private wallets. He also said that his cabinet would only introduce the necessary controls into the industry to prevent money laundering and would in no way hinder the development of the crypto ecosystem. On the subject of central bank digital currencies (CBDCs), Kennedy said that if he wins the election, CBDCs will not receive support because he sees them as financial instruments used for “oppression.” Source

Bitcoin to $120,000?

According to a Reuters report, Standard Chartered, a multinational bank founded in 1969, has increased its Bitcoin price forecast for 2024, predicting that the price of BTC could climb as high as $120 thousand next year. Back in April this year, the bank predicted that the price of Bitcoin could rise to 100 thousand dollars next year.

The UK-based banking giant hinted in a statement that the expected rise in the price of Bitcoin could also incentivise miners not to sell their newly mined bitcoins. This prediction is coupled with the fact that miners will have to sell fewer bitcoins to cover their operating costs, which include electricity consumption or renting space, as prices rise. At a price of $50,000, they estimate that miners would only need to sell 20-30% of the newly mined bitcoins, creating less sales pressure.

An increase in price is predicted to reduce daily bitcoin sales from the current 800 to 900 BTC per day to approximately 180-270 BTC, significantly reducing the amount of bitcoins for sale. Also contributing to this reduction is the Bitcoin halving process, which will reduce the amount of daily newly mined Bitcoins by exactly half by approximately April next year.

In this case, however, it is important to add that this is only a prediction, which may in no way correspond to the future behavior of miners and investors. Similar predictions have been relatively common in the past, and most of them have either failed to come true or have only partially come true. Therefore, it is necessary to be vigilant in the cryptocurrency market and invest wisely. Source

Declining Correlation Between Bitcoin and Stocks

Price movements are becoming less correlated with stock market behaviour, according to analyst firm Block Sholes. According to the company’s analysis, the 90-day rolling correlation of changes in bitcoin’s spot price with changes in Wall Street’s tech-heavy stock index, the Nasdaq index and the broader S&P 500 index has fallen to almost zero. The correlation between bitcoin and selected stock indices has thus reached its lowest levels in two years.

“It [the correlation] is now at the lowest level observed since July 2021, when BTC was between its twin peaks in April and November,” said Andrew Melville, research analyst at Block Scholes.

Researchers attribute this sharp decline in the correlation between cryptocurrencies and traditional financial markets to the effects of increased regulatory scrutiny by the SEC and the Federal Reserve’s rate hikes to address inflation in recent months. On the other hand, bitcoin’s correlation with gold rose from 0.03 points recorded during the US banking crisis in March to 0.16 recorded at the end of the second quarter, again underscoring investors’ appetite for safe-haven assets in times of uncertainty in traditional financial markets. Source