Monthly update July
Every month we will give you an update on the relevant developments and what it might mean for the current rates and investments.
We'll talk more about the influence from Germany, the Ethereum ETFs and the United States election. Don't worry, you'll still find the weekly gainers and losers on the bottom of this email!
Bitcoin rate last month
In July, the price was under significant pressure due to the large Bitcoin dump by the German government and the restitution of Mt. Gox's Bitcoins to its defrauded customers. After Trump announced that he would speak at the Bitcoin 2024 conference in Nashville, Tennessee, the price eventually recovered significantly.
Germany dumps Bitcoins
The German state of Saxony sold 50,000 seized Bitcoins last month. Since the government is required to liquidate seized goods, the Bitcoins were transferred to major exchanges and then sold. Germany earned approximately 2.6 billion euros from the sale. All the Bitcoins have now been sold, and after a temporary decline, the price has risen again. Some say that with a bit more patience, the German government could have earned 3 billion euros.
Repayments Mt Gox
Furthermore, the crypto exchange Mt. Gox, which went bankrupt in 2014, has started repaying the owed bitcoins. There are about 20,000 creditors who had investments with the exchange at the time of bankruptcy. When Mt. Gox (Magic: The Gathering Online Exchange) was declared bankrupt ten years ago, up to 950,000 bitcoins were lost. Part of this is being repaid to the defrauded users.
It is expected that these users will sell the newly received Bitcoins. When Mt. Gox went bankrupt, each Bitcoin was worth about $600; it now fluctuates around $60,000. In hindsight, it would have been the best investment ever. However, this probably won't immediately mean that Bitcoin will lose much of its value. Last month, the crypto exchange Gemini also had to repay over $2 billion in Bitcoin to their users after locking up the Earn program for 1.5 years, during which users could not access their Bitcoin. After the Bitcoin was returned, many users achieved an average profit of 230% and withdrew part of their bitcoins. The market quickly recovered afterward.
Experts therefore think that the payouts from Mt. Gox will have a similar effect on the market and that the repayments will be well-received. Bitcoins have already been transferred to the major exchanges, which will then distribute them to the rightful owners.
Ethereum ETF's on the market
After the approval of Ethereum ETFs in May, the first Spot ETFs were launched last month. Several funds are already live, including Grayscale's Ethereum Trust (ETHE). What is notable is that there has been a net inflow of one billion dollars across eight of the funds, but a net outflow of 1.5 billion dollars from ETHE alone. Excluding ETHE, the total net inflow in the first week is 40% of what it was for the first Bitcoin ETFs.
The total trading volume is also significantly lower. The spot Ethereum ETFs generated a cumulative $4.05 billion in their first week. This is one-third of what the Bitcoin ETFs generated in trading volume during their first week, which was over $11 billion. Most of this was trading in ETHE. Similar to Bitcoin, the volume started to grow at a later stage. Last week, the Ethereum ETFs generated over half the trading volume of Bitcoin ETFs, with the latter achieving a volume of $7.5 billion. Nevertheless, experts had initially projected a trading volume of 15-25%, so the achieved 34% is already above expectations.
Influence from the United States
Changes in the crypto market are naturally subject to changes in the rest of the world. There are notable developments not only in the economic sphere but also in politics.
Crypto has become a major topic in the upcoming U.S. elections. The Democratic presidential candidate Kamala Harris has renewed her ties with Ripple and Coinbase for her campaign to foster a constructive dialogue and develop a regulatory framework to advance the crypto industry.
Presidential candidate Trump has shown significant support for the crypto community during this campaign and appeared last month at the Bitcoin 2024 conference in Nashville, Tennessee, where he made several notable statements. He mentioned that he wants to make the United States the "crypto capital of the world" and that if he wins, he will stop the 'pursuit' of the crypto industry. He also said he plans to immediately fire Gary Gensler from the Securities and Exchange Commission (SEC), who has been critical of the crypto industry. Furthermore, Trump intends to keep all the Bitcoin currently held by the government as a strategic national Bitcoin reserve. Following this conference, the price of Bitcoin increased by 3%, reaching a new six-week high.
In the United States, inflation finally seems to be under control after a long period. Inflation is now at 2.5%, above the Federal Reserve (FED) target of 2%. This could mean that the FED might lower interest rates. Historically, this has had a positive impact on the investment climate, including on Bitcoin.
