Why Is Bitcoin Having A Rough Week

Bitcoin has had a rough week as inflation expectations rise. However, trade-fi infrastructure continues to be built, with Australia approving a Bitcoin ETF and the NYSE announcing plans to launch Bitcoin options.

Why Is Bitcoin Having A Rough Week

BTC Temperature

The Bitcoin price dropped to near one-month lows, to ~$65k. Since mid-March, Bitcoin has been moving sideways. Though the current drop feels significant, Bitcoin has been at these levels multiple times in the past three months.

The Bitcoin temperature dropped to 3.0 and is near a 1-month low.


Bitcoin ETF Inflows Pause This Week

Bitcoin ETF inflows dropped slightly this week.


Inflation Expectations Rise

Inflation expectations by consumers over 5-10 years have risen to their highest levels since the 1990s.

The market is lowering its expectations of rate cuts in response to inflation. It expects two rate cuts, the first in September-November and the next in December.

The inflation expectations and the delay in interest rate cuts put pressure on the Bitcoin price.


Australia Approves Bitcoin ETF

Link: https://www.afr.com/markets/equity-markets/asx-greenlights-first-bitcoin-etf-in-landmark-listing-20240614-p5jlry

Australia joins a growing list of countries to approve Bitcoin ETFs. Bitcoin ETFs have now been approved by:

  • Canada (2021)
  • Germany (2020)
  • Brazil (2021)
  • USA (2024)
  • Switzerland
  • Hong Kong (expected soon)

NYSE Plans Bitcoin Options

Link: https://markets.businessinsider.com/news/currencies/nyse-plans-bitcoin-options-bringing-another-tradfi-giant-into-crypto-1033431601

Currently, CME, one of the largest derivative exchanges in the world, offers Bitcoin options. NYSE competes with CME and is planning to launch Bitcoin options.

The traditional financial infrastructure continues to be built around Bitcoin as its acceptance as a mainstream financial asset grows.


Japanese Exchange Gets Hacked

Link: https://finance.yahoo.com/news/japanese-exchange-dmm-bitcoin-suffers-052839045.html

It's been a while since a crypto exchange was hacked, but this serves as a reminder not to keep your Bitcoin in an exchange wallet.

The best way to store your Bitcoin is to self-custody it using a hardware wallet like Trezor. However, if that does not work for you, Bitcoin ETFs provide the next best solution, with the downside that you pay a significant fee and contribute to Bitcoin's centralization.

Please do NOT keep your Bitcoin with exchanges except when buying and selling.


Magic Of The Price System

Milton Friedman's short clip explains the magic of the free market and the price system, which we must all vow to protect.


Summary

Bitcoin continues to trade sideways. Amid bullish news, Bitcoin continues to be under pressure from inflation and interest rate expectations.


Please give your comments and feedback on this report. See you in the next block.

Sandeep Goenka