The second quarter was not great for bitcoin, but the horizon is clearing. The $100,000 mark is still in sight before the end of the year.
FUD fades
Bitcoin fell 25%, dropping from $71,000 to $53,000. In percentage terms, this is the largest decline since February.
After rising 69% in the first quarter, bitcoin fell 13% in the second. Despite this correction, it remains the leader of all asset classes since the beginning of the year (+55%).
The fourth halving was the flagship event of the quarter and its impact was positive on the market. The impact was obviously not immediate. However, in the long run, the impact is equivalent to buying 450 BTC every day that will never be sold.
As we wrote recently, the German government and Mt. Gox-related bitcoin sales prompted traders to hedge. The turnaround in market sentiment was most clearly seen in ETFs.
The following chart shows that net flows into ETFs moderated in the second quarter, to $2.5 billion versus $12.1 billion in the 1st quarter.
We can see clear outflows from the beginning of June. That is, when the old sea serpent Mt. Gox resurfaced accompanied by the German government:
With the German government sales completed (50,000 BTC), net inflows into ETFs have turned positive again. Cumulative ETF investments are back to all-time highs.
As expected, the redistributions in the Mt. Gox bankruptcy (142,000 BTC) did not weigh down the market. More than 65% of the creditors have already been repaid without us seeing any massive selling. Around 90,000 BTC still need to be redistributed according to Arkhamor nearly 6 billion dollars.
China, the United States and Bitcoin
The horizon is clearing and the upcoming US presidential election already bodes very well for bitcoin.
Once skeptical, the former US president has finally changed his mind. The price of bitcoin even jumped by almost 10% following the assassination attempt over the weekend.
His speech at the Nashville Bitcoin Conference, which will take place from July 25 to 27, promises to be a hit!
Furthermore, let us note in passing that his running mate James Vance revealed in 2022 that he held between $100,000 and $250,000 worth of bitcoins…
Another reason to be optimistic is that the CEO of BlackRock – the world's largest investment fund – continues to sing the praises of bitcoin.
“I did my homework. My opinion of bitcoin five years ago was wrong. I now believe bitcoin is legitimate. […]. It is a legitimate financial instrument. […] It’s an instrument that you invest in when you’re afraid, when your country devalues its currency because of excessive budget deficits. It allows you to invest in something outside of your government’s control. I firmly believe that bitcoin has a place in a financial portfolio. […] I see bitcoin as digital gold”he told CNBC.
All that remains is to convince Xi Jinping of its merits. This will be difficult as long as China refuses to lift its capital controls. Indeed, no one can prevent bitcoin transactions.
We could imagine that the United States would accept bitcoin as the international store of value if China agreed to open its financial borders. Then there would be no point in maintaining the anathema on bitcoin.
Hong Kong's approval of bitcoin-backed ETFs gives cause for optimism.
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