After a long stretch of low volatility, bitcoin’s characteristic price swings returned in August as a confluence of market events and a legal decision for Grayscale hit the news.
In his August Notes from the CIO, Samir Kerbage covers the impact of the Grayscale decision on the spot ETF debate and what a return to volatility means for investors. Read more about the potential for a spot bitcoin ETF in the US and our views on the process here.
As investors await the outcome of the spot bitcoin ETF debate in the US, there are several important Bitcoin developments investors should monitor. Our Head of US & Europe Bruno Sousa penned an op-ed for Financial Advisor Magazine explaining what the past few months have been “Bitcoin’s summer of (institutional) love” and Head of Product Dramane Meite shared his views on a new KPMG report that addresses the misconceptions about Bitcoin and ESG.
As always, our team is here to answer any questions you have about these markets.
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The month of August was not favorable for the crypto asset market. The Nasdaq Crypto Index (NCI) recorded a 10.8% decline, marking its second consecutive month of losses. In the first half of the month, there was little fluctuation, with major crypto assets remaining mostly flat in the face of a scarcity of significant news.
However, in the second half of the month, things changed. A combination of factors—including news that Elon Musk's SpaceX had sold its bitcoins, concerns caused by the bankruptcy filing of Evergrande, and indications of possible interest rate hikes in the US—led to a sudden drop in crypto asset prices between the 16th and 18th, with the NCI falling 9.6%.
Following the decline, the market resumed trading sideways for a few days until, on the 29th, Grayscale received positive news regarding its lawsuit against the SEC. This judicial decision may pave the way for the approval of spot bitcoin ETFs in the US, but much uncertainty remains about how this could transpire. The NCI rose by approximately 6.5% in response to this news but the positive performance did not sustain until the end of the month.
Among the NCI constituents, Bitcoin and Ethereum experienced the smallest declines, at 10.0% and 10.9%, respectively. Uniswap and Litecoin, on the other hand, saw declines exceeding 30%. The Vinter Hashdex Risk Parity Momentum Index had a loss of 12.8%. Among CF Benchmarks' sectoral indices, DeFi, Smart Contract Platforms, and Digital Culture saw declines of 22.5%, 15.8%, and 14.7%, respectively.
Despite the drop, the year continues to be very positive for the crypto asset market, with the NCI up over 50%. As we wrote about recently, short-term price fluctuations are normal in a developing market like crypto assets. We remain highly optimistic about the medium- and long-term prospects for this asset class.
JPMorgan sees 'limited downside' for crypto markets over the near term
JPMorgan predicted the recent crypto market dip is ending, seeing limited downside in the near term. They note that crypto corrected as positive news faded, and that the unwinding of long positions in futures markets reduces the risk of further sell pressure. This insight is crucial for investors as it suggests the correction phase is concluding, potentially indicating a more stable market ahead.
Coinbase wins approval to list crypto futures in US
Coinbase has NFA approval as a Futures Commission Merchant (FCM), enabling eligible US customers to access crypto futures. Coinbase takes the lead as the first crypto-native frontrunner to seamlessly provide both traditional spot crypto trading and compliant leveraged crypto futures, all within a unified trading solution for their verified users.
Private equity titan David Rubenstein makes the case for Bitcoin
Rubenstein believes BTC is here to stay thanks to growing institutional interest and general global demand for a form of money that can’t be controlled by governments. The news is another example of traditional investors steadily recognizing Bitcoin’s potential.
PayPal ignites potential stablecoin stampede
Customers of the payment giant can now buy PayPal USD (PYUSD), a dollar stablecoin deployed on Ethereum. Eligible customers will be able to transfer PYUSD to other users and send it to "compatible external wallets.” This move reassures Ethereum as the go-to platform where TradFi giants will build revamped financial infrastructure and will create more demand for ETH as PayPal’s 400M+ customers start using PYUSD as a more efficient and secure way to send and receive digital dollars.
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