Enjoy the On the Margin newsletter on Blockworks.co today. Get news delivered straight to your inbox tomorrow. Subscribe to the On the Margin newsletter.
Welcome to On the Margin, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s episode:
- Where might crypto markets go after last week’s volatility and what key factors to watch out for?
- The Bitcoin mining giant is taking another step towards increasing its BTC supply.
- Investors are looking for positive signals. Casey details what they should look for.
What has changed after an unstable week?
After a wildly volatile week for the cryptocurrency market (and the broader market), some long-term price forecasts have changed… well… almost entirely. Others are less optimistic.
Data from Fineqia International shows that BTC actually ended last week up 0.9% from seven days earlier. But at one point it dipped below $50,000, swinging as much as 23.6% — a level of volatility not seen since February.
Bitcoin was trading at $59,160 at 2:30 p.m. ET Monday, up nearly 2% from a week ago and less than 1% in the past 24 hours. ETH, at around $2,670, is down slightly on the week but up 4.5% on the day.
All things considered, LMAX Group market strategist Joel Krueger said his outlook for the cryptocurrency market remains “constructive and unchanged.”
“From a technical perspective, there has been nothing in recent price action to indicate anything more than choppy trading within clear medium- to long-term uptrends for both Bitcoin and ETH,” he told Blockworks.
Kruger’s main concern in the coming weeks will be the destabilization of global markets due to growing geopolitical tensions.
Beyond the unwinding of yen-based trade and geopolitical concerns, larger factors still come into play, including U.S. monetary policy and the November elections.
The market is roughly split between expecting a 50 basis point rate cut and a 25 basis point cut at the Fed’s Sept. 18 meeting, CME Group data show. Polymarket odds are currently showing a tight race (51% for Kamala Harris, 46% for Donald Trump) in the Nov. 5 election.
Observers in the segment say clarity on these topics will likely be a key factor in helping cryptocurrency prices break out of their current range one way or another.
Meanwhile, Transform Ventures founder Michael Terpin said a price rally was “unlikely” during the quieter, holiday-heavy month of August, and that the noted pullbacks in the six months following the halving were not unusual.
Terpin expects that regardless of the next 60 days, the bull market will continue on a four-year cycle, with steady gains in October and November.
He added that a Trump victory in November would attract a flood of new buyers who could push the price of BTC above $100,000, the year-end price target voiced by a number of industry observers in recent months.
But there are risks, notes YouHodler risk manager Sergey Gorev.
He argues that while cryptocurrency price dynamics take into account this year’s rate cut, this “positive fact” will not necessarily drive up crypto asset prices.
In addition, the market is forecasting significant risks if Trump loses the election. On the other hand, the arrival of a new president points to risks arising, for example, from structural economic changes.
Bitcoin also recently experienced a “death cross” where the 50-day moving average crossed below the 200-day moving average.
“This fact is an extremely negative indicator for traders, and many of them are starting to look for an entry point into short positions instead of buying the market,” Gorev told Blockworks. “In the current configuration, it is difficult to say what prices will be in the near future.”
Economist Timothy Peterson wrote in a post last week that death crosses were not always deadly.
Ultimately, however, Gorev expects a global economic crisis to occur, which will have a long-term impact on asset prices.
“In the optimistic scenario, we expect BTC to renew its all-time high price, and a significant price decline will follow as part of the correction and global crisis,” he said. “In the pessimistic scenario, the all-time high price will not be reached, and a major downward price correction may have already begun.”
Most likely, someone will be right.
— Ben Strack
650 million dollars
The value of crypto assets that Cynthia and Eddie Petion and their company NovaTech fraudulently obtained, according to new SEC charges.
On Monday, the U.S. securities regulator indicted the founders of Petions and NovaTech, alleging the group ran a multi-level marketing scheme and crypto-asset investment program from 2019 to 2023.
“NovaTech used most of the investor funds to make payments to existing investors and pay promoter fees, while using only a portion of the investor funds for trading,” the SEC said Monday.
Marathon Digital Takes Steps to Buy More BTC
After Marathon Digital announced last month that it would adopt a “complete HODL approach,” the Bitcoin miner appears to be following in the footsteps of the largest HODLer of Bitcoins of all.
The company said Monday it intends to offer $250 million in convertible senior notes due 2031 in a private offering to qualified institutional buyers.
Marathon expects to use the proceeds from the bond sale “to acquire additional Bitcoin and for general corporate purposes.” The latter category includes potential strategic acquisitions, expansion of existing assets, and debt repayment, the company notes.
You’ve seen this move before, right? If you follow MicroStrategy, you have.
MicroStrategy completed an offering of $800 million in convertible senior notes due 2032 in June, following the business analytics firm’s completion of a similar offering in March.
The sales preceded MicroStrategy’s move to buy more BTC.
As of August 1, MicroStrategy held 226,500 BTC, making it the largest corporate holder of the asset to date.
Marathon’s BTC holdings have surpassed the 20,000 mark after the miner bought $100 million worth of bitcoin last month. CEO Fred Thiel called bitcoin “the world’s best Treasury reserve asset” at the time — noting that it encourages sovereign wealth funds, governments, and corporations to hold BTC.
I doubt Marathon has a specific goal of ever having as much or more BTC as MicroStrategy. But if so, it still has a lot of catching up to do.
— Ben Strack
On our radar
After last week’s market turmoil, investors will be looking for signs that the troubles are behind them and that the Fed is set to cut interest rates in September. Here’s what we’re seeing:
- The big data point this week is the July CPI report, due out on Wednesday. While it’s not the Fed’s preferred measure of inflation, it’s still going to be revealing. Analysts are forecasting a 0.2% month-over-month increase in core CPI, which would show an annual inflation rate of 3.2% in July. That would be just slightly below the 3.3% annual rate seen in June. If you recall, we had a small bump in inflation at the start of the year, with the annual inflation rate sitting at 4%+. However, in recent months, we’ve seen a reversal toward disinflation, indicating that the labor market may be suffering and economic growth may be slowing. Overall, Wednesday’s release could bode well for a rate cut in the fall.
- Thursday’s jobless claims report will be interesting again this week. After last week’s numbers showed the highest number of initial jobless claims in nearly a year, the market (and the Fed) will want to see this number fall this week. Further gains would mean further softening in the labor market. But it’s worth noting that summer is historically a volatile time for employment data, so take any bad news on Thursday with a grain of salt.
– Casey Wagner
Bulletin board
- Cryptocurrency consumer advocacy group DeFi Education Fund said Monday it has acquired a patent from True Return Systems, ending a years-long legal battle against MakerDAO and Compound Protocol.
- Bitcoin investors are increasingly making trades on weekdays (rather than weekends), according to a new report from Kaiko Research. The trend in the ratio of weekday to weekend trades for Bitcoin has been steadily declining since 2022, the report says.
- Nearly two years after being banned, former President Donald Trump is back on X (formerly Twitter) — at least for the evening. The Republican nominee will join X owner Elon Musk for an interview on the platform at 8 p.m. ET Monday.
