Crypto Weekly Wrap: 21st July 2023
▶ Institutional Inflows:
Over the previous four weeks, institutional inflows into digital asset investment products have increased by more than US$742 million, marking the longest streak of inflows since the fourth quarter of 2021. Last week, Bitcoin witnessed inflows of US$140 million, or 99% of all inflows. While US$3.2 million in outflows were recorded in the 12th week of short bitcoin investment products. Ethereum, meanwhile, has not had any inflows since last week's US$2 million losses, which still makes it the asset with the highest outflows for the whole year. Despite the continuation of institutional inflows into digital asset investment products, Bitcoin has tapered off from its new yearly high of $31,700.
▶ US Presidential Race:
U.S. Democratic presidential candidate Robert F. Kennedy Jr. has vowed to back the US dollar with Bitcoin and other hard assets (gold, silver, platinum and BTC) if elected president. He has also unveiled a plan to exempt Bitcoin from capital gains tax when it's converted into US dollars. Kennedy asserted that supporting the U.S. dollar with so-called "hard currency," such as gold, silver, platinum, or Bitcoin, could aid in re-stabilizing the American economy while speaking at a Heal-the-Divide PAC event earlier this week.
▶Bitcoin ETF Update:
Applications for spot Bitcoin ETFs from a number of companies have been published in the Federal Register, advancing them in the SEC procedure. Although the SEC published paperwork last week asking for public input on bitcoin ETFs, the formal review process doesn't begin until filings are published in the register. This establishes a 45-day deadline at first, but it can be extended up to 240 days. Executive orders, federal agency regulations, proposed agency rules, and other papers that are required by law to be published are all included in the register. While there is no guarantee the SEC will approve any of the applications, the filing by industry giant BlackRock has fueled speculation that permission is more likely.
▶ Bitcoin MVRV Z-Score:
MVRV Z-Score is a bitcoin chart that identifies periods where Bitcoin is extremely over or undervalued relative to its 'fair value'. The MVRV Z-score has historically been very effective in identifying periods where market value is moving unusually high above-realised value. These periods are highlighted by the z-score (red line) entering the pink box and indicate the top of market cycles. It has been able to pick the market high of each cycle within two weeks. It also shows when the market value is far below realised value, highlighted by the z-score entering the green box. Buying Bitcoin during these periods has historically produced outsized returns.
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