CoinLoan Weekly: Jobs report dip, BlackRock’s crypto deal, retail interest in BTC
Having slid below $23,500 on Monday, August 1, BTC stayed in the region for six consecutive days, save for Wednesday’s uptick ($23,561.83 on August 3). On Thursday, August 4, it bottomed out from $22,526.44. Monday evening (August 8) brought a high of $24,185.79.
Friday’s dip below $23,000 (August 5) followed the optimistic U.S. Labor Department report. The projected growth goes against the previous signs of a slowdown, making the Fed less likely to scale back its interest rate hikes. The Fear & Greed index hovered around 30, confirming a decline in sentiment.
As of this writing, BTC is changing hands at $23,951.33, with a 24-hour rise of +3.2% and a 7-day gain of +2.4%.
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After a plunge to $1,574.01 on Tuesday, August 2, ETH failed to rise above $1,700 until Friday, August 5, and remained below $1,750 throughout the weekend. Like BTC, ETH jumped again on Monday, August 8, reaching $1,806.67.
The effect of the jobs numbers was milder, and ETH regained ground on Friday afternoon (August 5). Experts note improved sentiment for Ethereum-focused products due to the approach of the Merge. CoinShares points to nearly seven consecutive weeks of positive inflows in ETH-based funds totaling $159 million.
As of now, ETH is trading at $1,785.35, with a 24-hour increase of 4.2% and 7-day growth of 6.1%.
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Unlike BTC and ETH, XRP failed to recover from its Monday’s plunge below $0.385 (August 1). It fluctuated between $0.38 and $0.365 for six days, with a 7-day low of $0.364995 on Wednesday, August 3. On Monday, August 8, XRP shot up to just under $0.385.
XRP is still dragged in its legal battle against the SEC, which affects the sentiment. Yet both 20-day EMA and the RSI are on the rise, which means holding above $0.39 could trigger a new up-move. In the last fifty days, XRP has technically formed a bullish structure, but the low volume confirms sideways trading.
As of now, XRP is trading at $0.381904, with a 24-hour climb of 1.6% and a 7-day uptick of 0.3%.
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BlackRock forges deal with Coinbase
In 2017, BlackRock CEO Larry Fink was skeptical of Bitcoin to the point of equating it with money laundering. Now, the biggest asset management firm has struck a deal with Coinbase to give clients access to the crypto market.
The US-based exchange will connect to the company’s Aladdin investment management ecosystem, so users can add Coinbase BTC holdings to their portfolios. According to the press release, this should “bring institutional-grade capabilities to the management of crypto exposure across the investment lifecycle.”
More cryptocurrencies could follow BTC in the future. This opportunity comes at a dismal time for Coinbase, which is reeling from the market downturn, dramatic staff cuts, and insider trading charges brought against its former employee.
This year’s Nasdaq poll of 500 investment advisors confirmed a dominant bullish sentiment. Despite the entailing market turbulence triggering a spate of bankruptcies, crypto’s appeal to institutional investors is still growing.
Considering BlackRock’s enormity, its foray is a significant validator for the asset class. Joseph Chalom, the company’s global head of strategic ecosystem partnerships, said, “Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets.”
Yet many investment firms are still cautious as they want evidence that crypto is within the scope of securities regulation and supervision. A Schwab spokesperson told Barron’s Advisor, “We recognize that there is considerable interest in cryptocurrencies, particularly in certain segments of the market, and will consider introducing direct access to cryptocurrencies when there is further regulatory clarity.”
The latest regulatory developments could make investors and compliance departments less reluctant. A bill introduced by senators Debbie Stabenow and John Boozman would give the Commodity Futures Trading Commission (CFTC) the leading role in overseeing BTC and ETH. Meanwhile, the Securities and Exchange Commission (SEC) has filed an insider trading case that may prompt Congress and other regulators to create more certainty in the crypto space.
Retail interest bolsters BTC’s rebound
One category of investors can be credited with some of BTC’s rebounding over the past month. According to several market indicators, smaller retail traders, particularly US-based ones, have been driving the demand.
Mom-and-pop investors (those with limited experience who trade modest amounts) are increasingly into crypto. Moreover, “retail are buying Bitcoin at the fastest rate in history,” in the words of GlobalBlock analyst Marcus Sotiriou.
The Coinbase Premium Gap attests to this observation. It compares the demand among US investors (BTC/USD on Coinbase Global) against their foreign counterparts (BTC/USDT on Binance). Between July 12 and July 31, the indicator saw a $35 discount per BTC turn into a $20 premium, the highest since BTC traded at $57,000. Local investors are eager to scoop up the coin.
So, why smaller traders? In July, the overall BTC supply in the biggest 1% of accounts shrank by 20,000 – to 17.32 million. Meanwhile, the supply in accounts holding over $10,000 rose by 200,000 – to 18.4 million.
According to Sotiriou, the 90-day change in addresses with less than 1 BTC is unprecedented. “The fact that a similar rate of accumulation is happening now after a 70% drop demonstrates conviction from retail holders in Bitcoin’s long-term value.”
Two-thirds of exchange-traded digital asset volumes take the form of crypto derivatives. Due to trading on the Chicago Mercantile Exchange (CME) and CFTC regulation, BTC futures are particularly appealing to institutional investors in the US, but this is also changing.
On CME, a standard Bitcoin futures contract is valued at 5 BTC. In July, the total number of such outstanding contracts (open interest) shifted only slightly – from 13,466 to 13,480. In stark contrast, the open interest in micro Bitcoin futures (10% of 1 BTC) soared by over 55% – from 15,998 to 24,960. Clearly, retail investors are piling into BTC.