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Block 1: Essential news
Black Monday
On Monday August 5, bitcoin recorded its worst day since the FTX bankruptcy in November 2022. In the space of a few hours, the price of the digital currency fell from $58,000 to $49,000, a drop of over 15%. This was due to a worsening economic outlook in the United States, particularly on the employment front, and a reversal in Japanese monetary policy. Conditions that did not play in favor of risky assets such as cryptocurrencies. Since then, bitcoin has regained ground and is now trading at around $57,000.
Coinbase publishes good figures
Coinbase has published its results for the 2nd quarter of 2024. Sales of $1.38 billion were double the $663 million in Q2 2023, despite an 11% drop on the previous quarter. Coinbase makes its money as a custodian for many Bitcoin and Ethereum ETFs, generating an additional revenue stream. The company also holds $7.8 billion in cash, mainly in bonds. Coinbase shares trade at $194, up 51% year-to-date, with a market capitalization of over $48.25 billion.
MicroStrategy continues to accumulate BTC
MicroStrategy has purchased 169 Bitcoins for $11.4 million, bringing its total to 226,500 BTC worth $14.6 billion. This latest purchase comes despite a 7.4% year-on-year decline in Q2 2024 revenues. Gross profits fell by 14%, and operating losses rose by 650%. Despite these declining economic results, MicroStrategy continues to strengthen its Bitcoin investment strategy, recording a total capital gain of $6.3 billion. The company is targeting an average annual return of 4-8% over the next three years.
Zonebourse
Tether: A cash machine
Tether posted a record net profit of $5.2 billion in the first half of 2024, mainly thanks to US Treasuries. In the second quarter, It achieved a net operating profit of $1.3 billion and a USDT market capitalization of over $114 billion. The company holds $97.6 billion in Treasuries, surpassing countries such as Germany and Australia in terms of U.S. debt holdings. Despite an unrealized loss of $653 million due to bitcoin's decline, Tether's shareholders' equity increased to $11.9 billion. Tether reinvests its profits in strategic projects (Artificial Intelligence and bitcoin mining) to support the cryptocurrency ecosystem, while maintaining excess reserves of $5.3 billion to guarantee the stability of the USDT.
Block 2: Crypto Analysis of the week
An epic crypto summer seemed underway: bitcoin approached all-time highs, ETFs popularized digital assets and Donald Trump promised a cryptocurrency-friendly White House and bitcoin mining.
It's worth noting that in 2024, the United States accounted for around 37.8% of global bitcoin mining, according to the Cambridge Bitcoin Power Consumption Index, a sign that America could become an increasingly important player if Trump adopted pro-crypto measures. For the time being, we're still at the level of election promises. According to CoinDesk, in 2023, bitcoin mining operations in the U.S. generated $2 billion in revenue, or 3% of the output of the U.S. steel industry. Direct employment in bitcoin mining in the US reached around 1,700 jobs, doubling over the past two years. If indirect employment is taken into account, PwC estimates that this figure rises to around 11,000 jobs nationwide.
But the good crypto momentum was broken this week when traders were called to order by what influences prices most: investor sentiment and positioning in traditional markets.
The unwinding of the Japanese yen carry trade and poor US employment figures triggered one of Wall Street's most dramatic periods in recent years, wiping out around $6.4 trillion in global equities. Crypto-currencies followed suit on Monday as part of a widespread panic, and investors turned away from risky assets, with ether (ETH) suffering its worst one-day fall since September 2021 and bitcoin (BTC) losing up to $172 billion in capitalization.
As is so often the case, the cryptosphere's gurus reminded the community that buying cryptocurrencies should not be motivated by profit, but by supporting future technology. In other words: Bitcoin loses 15% and ether 35%, but close your eyes, you're in it for the technology.
"Focus on technology, industry and adoption," tweeted Jeremy Allaire, CEO of stablecoin issuer Circle.
Still as bullish as I was six weeks ago.
Focus on the technology, industry and adoption.
Don't focus on prices of digital commodities in the face of global macro gyrations, unless you are just here for trading. https://t.co/UBa9rQUHJx
- Jeremy Allaire - jda.eth / jdallaire.sol (@jerallaire) August 5, 2024
"Recent declines in crypto and equity prices are influenced by macroeconomic factors. We don't think this is a long-term negative trend," added Binance executive Richard Teng.
Recent sharp drops in crypto & equity prices are influenced by macroeconomic factors. We do NOT believe it's indicative of a long-term negative trend.
With potential Fed rate cuts & geopolitical volatility, there's still significant potential for market fluctuations.
Reminder...
- Richard Teng (@_RichardTeng) August 5, 2024
Donald Trump has proposed making bitcoins seized by the authorities a strategic reserve. Wyoming Republican Senator Cynthia Lummis wants to buy an additional million bitcoins for this reserve and use them to pay down the national debt. (At current rates, 1 million bitcoins is worth around $55 billion, a tiny sum compared to the $35,000 billion US debt).
If buying bitcoins requires as much risk appetite as investing in an innovative startup, it's unlikely that governments and institutions will be jumping in anytime soon. And while JPMorgan believes that the carry trade is still being unwound, the immediate future for cryptocurrencies is a little more uncertain.
On the other hand, bitcoin is the safest way for investors to gain exposure to the cryptocurrency market and, in this context, remains an excellent store of value for this sector compared to other crypto-assets.
Block 3: Gainers & Losers
Crypto chart (Click to enlarge)
Block 4: This week's readings
Trump's embrace of cryptocurrencies could spell disaster for Bitcoin (Wired)
Donald Trump's plan to accumulate billions of dollars in Bitcoin perplexes economists (Wired)
Make Bitcoin Great Again - what Donald Trump's support for crypto could mean for the industry (The Conversation)
