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Blackrock makes its case for Bitcoin as its price stalls

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Blackrock, the largest asset manager in the world, has published a comprehensive report on Bitcoin. 

In a report, BlackRock executives Samara Cohen, Robert Mitchnick, and Russell Brownback noted that Bitcoin (BTC) was a unique asset for diversification purposes.

Bitcoin solves core money problems

This report is notable because of the roles of the authors at BlackRock. Cohen is the Chief Investment Officer of ETF and index investments, Mitchnick is the company’s head of assets, and Brownback heads global positioning for fixed income.

First, they noted that Bitcoin is a limited asset with a supply cap of 21 million coins, unlike other forms of money. For example, there is an unlimited supply of U.S. dollars since the Federal Reserve has the final say on how much to print. During its last quantitative easing program, the Fed boosted its balance sheet from less than $5 trillion to $8.9 trillion.

Second, BlackRock believes that Bitcoin makes it easier for people to move money across borders. While this is true, Bitcoin transactions tend to be more expensive than sending fiat currencies. As a result, stablecoins like Tether (USDT) and USD Coin (USDC) have emerged as the most popular digital currencies for cross-border payments.

Additionally, they noted that Bitcoin is a truly decentralized global monetary system not controlled by a central authority.

BTC is uncorrelated with stocks and gold

According to BlackRock, Bitcoin is also a highly uncorrelated asset and has a long track record of strong performance. It has risen by over 807,000x since its inception. The coin often outperforms traditional assets like the S&P 500 and gold when global risks rise.

For example, its 60-day return during the U.S. and Iran tensions in January 2020 was 20%, while the S&P 500 dropped by 7% and gold rose by 6%. Bitcoin also rose by 21% after the Covid outbreak in March 2020, while the S&P 500 and gold increased by 2% and 3%, respectively.

Additionally, Blackrock believes that Bitccoin is a good asset as the US public debt rises. The latest data by the National Debt Clock shows that the country has over $35.2 trillion in debt and is now spending $1 trillion to service it. In an opinion piece, the Wall Street Journal warned that a national debt crisis was coming.

Bitcoin also outperformed traditional assets during other major events like the Russia’s invasion of Ukraine and the recent yen carry trade unwinding. 

BlackRock’s views on Bitcoin are important because of its role in the global economy. In its latest financial results, the company revealed that it had over $10.7 trillion in assets, representing 41% of the American gross domestic product. It is also the biggest player in the spot Bitcoin ETF industry, with over $21 billion in assets.

Bitcoin is stuck in a range

Bitcoin price chart | Source: TradingView

BlackRock’s statement came as Bitcoin continued consolidating around the $60,000 mark as traders awaited the Federal Reserve’s decision.

Bitcoin is consolidating at the 50-day and 200-day moving averages and has formed a series of lower lows and lower highs. Therefore, the short-term outlook for Bitcoin is neutral. A bullish breakout will be confirmed if it moves above the upper descending trendline, while further downside could occur if it drops below $52,000.

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SkyBridge’s Scaramucci expects Bitcoin to hit six figures by 2024-end

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SkyBridge Capital’s Anthony Scaramucci predicts Bitcoin could reach $100,000 by the end of 2024, driven by rate cuts and potential pro-crypto legislation.

SkyBridge Capital founder and hedge fund manager Anthony Scaramucci predicts Bitcoin (BTC) will reach $100,000 by the end of 2024, driven by U.S. interest-rate cuts and potential pro-crypto legislation.

In an interview with Bloomberg, Scaramucci highlighted that upcoming Federal Reserve rate cuts and bipartisan support for crypto and stablecoin legislation in the next U.S. congressional term could fuel a significant rise in Bitcoin’s value.

“We are going to get pro-cryptocurrency, Bitcoin, and stablecoin legislation in the first part of the next congressional term in the U.S. At the same time, you are intersecting with rate cuts from the Federal Reserve.”

Anthony Scaramucci

A former communications director for Donald Trump, Scaramucci noted the Republican nominee’s recent shift to a pro-crypto stance as he seeks votes in a close race against Vice President Kamala Harris, whose position on crypto is less defined.

Despite the ambiguity, Scaramucci expressed optimism about the regulatory landscape under a potential Harris administration, citing positive discussions with her campaign team. The SkyBridge Capital head expects the Federal Reserve to cut borrowing costs by half a percentage point, with up to 150 basis points of cuts in the next 18 months. He believes such moves will be favorable for asset prices globally, including Bitcoin, which has already risen 5% in the lead-up to the Fed’s policy decision.

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Immutable X, Celestia, Bittensor lead ahead of the FOMC decision

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Cryptocurrency prices were mixed as traders focused on the upcoming Federal Reserve meeting, with the crypto fear and greed index remaining in the fear zone.

Immutable X (IMX), the gaming and non-fungible token-focused coin, was the best performer, rising by 17.7% to its highest point since Aug. 31. It has jumped by almost 60% from its lowest level in August.

Immutable’s jump occurred as total NFT sales in its ecosystem surged by over 125% in the last 24 hours. These sales were primarily driven by Guild of Guardians Heroes, whose sales rose by 145% to $647,067.

Still, like other chains, Immutable’s NFT sales have been in a long-term downward trend over the past few months. Sales dropped by 33% in the last 30 days to $15 million, while the number of buyers fell by 31% to 12,177.

Celestia (TIA), a leading player in modular data, rose by 15% to its August 26 high, while Bittensor (TAO) jumped by 13% to its June 24 high. These tokens gained as demand among investors increased, with Celestia’s 24-hour volume rising by 23% to $138 million and Bittensor’s volume rising by 5% to $85 million.

Bittensor also benefited from the rising interest in artificial intelligence-focused coins and stocks. Nvidia shares have rallied by 9% in the last five days, while Microsoft rose by 7%. Microsoft, a major investor in OpenAI, the maker of ChatGPT, saw increased positive sentiment, with 85% of CMC users being bullish. 

Looking ahead, the main catalyst for these altcoins will be Wednesday’s Federal Reserve decision. 52% of participants in a Polymarket poll with over $45 million in assets expect the Fed to cut rates by 0.50%. 47% of them see a 0.25% cut.

In theory, these tokens should perform well when the Fed starts cutting interest rates, as it would incentivize investors to move to riskier assets. However, there is also a risk that these coins could retreat, as the rate cut may already be priced in by market participants

This likely explains why the crypto fear and greed index has remained in the fear zone at 34. Historically, cryptocurrencies tend to drop when fear dominates market sentiment.

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Crypto braces for a key risk: Japanese yen carry trade unwind

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Bitcoin and most altcoins remained in a tight range as the crypto fear and greed index moved to the fear zone of 33 ahead of the Federal Reserve and Bank of Japan decisions.

Bitcoin (BTC) has been stuck below $60,000 this week while Ethereum (ETH) was below $2,400. Other big coins like Solana, Tron, and Litecoin were barely moved this week.

Bitcoin’s consolidation occurred as MicroStrategy, the largest corporate holder of Bitcoin, added more coins to its balance sheet. The company now holds 244,800 coins worth over $14.1 billion. Spot Bitcoin ETFs saw net inflows of over $144 million in the first four days of the week.

Ethereum, on the other hand, remained under pressure as ETF outflows continued, and as Vitalik Buterin and the Ethereum Foundation reportedly sold more coins. There are signs that more Ethereum whales are liquidating their tokens.

Federal Reserve and BoJ decisions ahead

Looking ahead, cryptocurrency prices could come under pressure next week as the Federal Reserve and the Bank of Japan meet.

The Fed is expected to cut interest rates following this week’s encouraging U.S. inflation data and last week’s mixed nonfarm payrolls report. The swap market is predicting a 0.50% interest rate cut at that meeting.

Economists expect that the BoJ will leave interest rates unchanged at 0.25%. However, as it did last time, the bank may catch the market by surprise by hiking interest rates again. In a recent statement, Kazuo Ueda, the bank’s governor, hinted that he may be ready to hike again if inflation remains high.

A Fed cut and a BoJ rate hike would reduce the spread between U.S. and Japanese yields, invalidating a carry trade that has existed for years.

In a carry trade, investors borrow from low-interest rate countries and invest in higher-interest rate ones. This likely explains why the Japanese yen rose to 140 against the U.S. dollar, a 13% increase from its lowest point this year.

The impact of this unwind could have an impact in the cryptocurrency industry as it happened in August. Bitcoin dropped to $49,000 while Ethereum fell to $2,100 in during the crypto Black Monday.

Therefore, there is a likelihood that Bitcoin, altcoins, and stocks will experience some volatility as the Fed and BoJ make their decisions on Sept. 18 and Sept. 20, respectively.

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AAVE, Uniswap, ICP climb as Bitcoin retreats with cooling US CPI

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Cryptocurrency prices and stock indices retreated slightly after the U.S. published encouraging Consumer Price Index data.

Uniswap, ICP, AAVE rise, Bitcoin retreats

Bitcoin (BTC) retreated to $56,600, while the total market cap of all cryptocurrencies fell to $2 trillion. The same happened in the stock market, where Dow Jones, Nasdaq 100, and S&P 500 index futures retreated by over 0.50%.

Most cryptocurrencies were in the red after the CPI data. The top gainers were Internet Computer (ICP), AAVE (AAVE), Uniswap (UNI), and THORChain (RUNE), which rose by over 2%. 

According to the Bureau of Labor Statistics, the headline CPI dropped for the fourth consecutive month, reaching 2.5%, its lowest level since 2021. The CPI remained unchanged at 0.2% on a month-on-month basis.

The core CPI, which excludes the volatile food and energy prices, rose from 0.2% to 0.3%, higher than the expected 0.2%. It remained at 3.2% on an annual basis.

These numbers came a few days after the bureau published mixed jobs data. The economy created 112,000 jobs in August while the unemployment rate remained above 4.0%.

Fed is set to cut rates next week

Bitcoin, altcoins, and stocks reacted mildly to the U.S. CPI data, as it will likely not have a significant impact on the Federal Reserve when it meets next week. The CME Fed Watch tool shows that 85% of market participants expect the Fed to deliver a 0.25% rate cut, bringing the official cash rate to between 5.25% and 5.50%.

In theory, risky assets like Bitcoin should perform well when the Fed is cutting interest rates due to the vast sums of money in money market funds. When government bond yields drop, many investors may rotate into these risky assets.

However, this rotation will likely take time, as Fed cuts are expected to be gradual, meaning that fixed income will still offer attractive yields for a while.

Bitcoin and altcoins may have also retreated due to the rising odds that Kamala Harris could win the general election after the debate. Polymarket data shows that she has flipped the lead from Donald Trump, who has been ahead for a while. Still, it is too early to predict who will win, as polls indicate a tight race.

Uniswap token rose because of the rising volume in its DEX platform. Data by DeFi Llama shows that its weekly volume rose by over 33% to over $6 billion. AAVE, on the other hand, rose as whale accumulation continued.

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Chart of the week: Last Fed rate cut sent Cardano crashing 57% – what about now?

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Cardano dropped 57% when the Federal Reserve cut rates back in 2019. With another rate cut on the horizon, the cryptocurrency faces a similar setup that could bring major downside.

Cardano prepares for September decline

In May 2019, the Federal Reserve initiated its first rate cut, lowering rates from 2.42% to 2.39%. Rates at that time were much lower than today, and the public debt stood at $22 trillion. Today, debt has increased to nearly $35 trillion, and interest rates now stand at 5.33%, more than double the 2019 levels.

Federal Reserve Economic Data (FRED)

When the rates started to fall in 2019, Cardano experienced a sudden drop. After a brief period of recovery, the downtrend continued for months until early 2020. An uptrend emerged later, but the market downturn during the COVID-19 pandemic coincided with further rate cuts. Despite uncertainties around the exact link between rate cuts and crypto declines, Cardano and the broader market saw a clear decrease in value.

A similar scenario could unfold today. Crypto has shown correlations with traditional finance in the past, including during the 2019 rate cut. The Federal Reserve’s upcoming meeting is likely to result in a rate cut based on CME data. If the market follows the 2019 pattern, Cardano could face a multi-month decline, which could last until the end of the year, before recovering in early 2025. A repeat of the previous trend could push Cardano’s price down to around $0.15.

Additionally, September has often proven to be a tough month for both stocks and crypto. In September 2020, during a halving year, Cardano also faced a downtrend. Coupled with the current 10% drop since the start of this month, these factors could drive Cardano toward a deeper fall in the weeks and months ahead below its 2022 support line at $0.2349.

Cardano’s bearish momentum grows with SRSI, MACD, and VRVP

Many traders focus on short-term movements, but stepping back for a longer-term view can give a better sense of the bigger picture. Cardano’s monthly Stochastic RSI (SRSI) and MACD are flashing warning signs that shouldn’t be ignored, and both are painting a rough picture for ADA.

The SRSI tracks momentum by looking at an asset’s price range over time. The scale goes from 0 to 100, with anything below 20 showing oversold conditions. Since March 2024, the SRSI has been sliding, and it’s now closing in on that oversold region.

The MACD, meanwhile, is showing similar bearish vibes. On the monthly chart, the MACD line has already crossed below the signal line, which is a sign of downward pressure. The histogram, which shows the gap between the two lines, is about to flip red, also pointing to a growing bearish momentum.

Alongside the bearish signals from the Stochastic RSI and MACD, the Visible Range Volume Profile (VRVP) adds even more negative pressure to the outlook. The VRVP shows where most trading volumes occurred at various price levels. In Cardano’s case, the volume bars within the current price range are quite thin, which indicates weak support. The biggest volume bar begins at the $0.15 level, suggesting a strong support zone there. Below the current price, there’s a gap in the volume profile, which means if Cardano continues to fall, there’s little trading activity to slow down the drop until it reaches that $0.15 zone.

Is Cardano’s 2022 support line strong enough to hold?

Despite the bearish indicators, a couple of factors could prevent Cardano from dropping sharply. At the moment, the price sits within a macro Fibonacci golden pocket, drawn from the all-time low to the recent high in March 2024. This zone, between $0.2951 and $0.3204, has acted as support for now. However, when looking at other Fibonacci retracements from different points, ADA has already fallen below the 78.6% retracement on every one of them. This could raise doubts about the strength of the current golden pocket, as there’s a possibility it may not hold up in the long term.

A stronger support level, however, lies at $0.2349, a line that was respected during the 2022 bear market. But, with ADA currently around $0.315, a drop to that support would still represent a 25% decline, which would be far from ideal. 

Strategic considerations

In our view, there could be a dead cat bounce before the September 18 Fed meeting. However, after that, ADA is likely to face a 2-3 month downtrend until the Fed slows the pace of its rate cuts. A more cautious strategy would be to wait for ADA to drop below the $0.2951 golden pocket before shorting. This offers a safer entry point compared to shorting immediately right now, as Cardano could see a short-term uptrend while holding above the golden pocket. If the price falls below this level, shorting down to $0.2349 becomes a more calculated move.

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CleanSpark and MARA stocks form rare pattern as BTC hits 54k

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Popular Bitcoin mining stocks have formed the rare death cross pattern, pointing to more pain ahead.

CleanSpark and Marathon Digital have formed a death cross

Marathon Digital, the largest mining company in the industry, dropped to $13.75 on Sep. 6, its lowest swing since December of last year. It has fallen by 60% from its highest point this year, erasing over $4 billion in value.

Similarly, CleanSpark shares crashed to $8.39, the lowest point since February, and are 66% below their highest level this year. Its market cap dropped from $5 billion in March to $2 billion.

Other Bitcoin (BTC) mining stocks, such as Riot Platforms, Core Scientific, Cipher Mining, and Argo Blockchain, have also continued to fall.

Most notably, Marathon Digital and CleanSpark have formed a death cross pattern, where the 200-day and 50-day moving averages have crossed each other. In most periods, this pattern leads to more downside.

Marathon Digital stock | Source: TradingView

A notable example of this is Riot Platforms, which formed a death cross on April 9. Since then, the stock has dropped by 40% and is hovering at its lowest point since March 2023, making it one of the worst-performing mining stocks this year.

Bitcoin is also nearing a death cross

These mining stocks are crashing due to a combination of two factors: low Bitcoin prices and weak production.

Bitcoin dropped below $55,000, reaching its lowest point since Aug. 7. It has fallen by 25% from its highest point this year and by 15% from its August high.

Bitcoin’s sell-off may continue as it has formed a series of lower lows and lower highs. It is also close to forming a death cross, indicating that bears have taken control. A drop below last month’s low of $49,000 could signal further downside.

Bitcoin price chart | Source: TradingView

Bitcoin mining companies are also producing fewer coins than they did in August because of the halving event. Marathon Digital produced 673 coins in August, down from 692 in July and 850 in April.

Similarly, CleanSpark produced 478 coins in August after producing 721 in April while Riot Platforms mined 322 coins in August from the previous month. Other mining companies have seen a similar drop in production.

Therefore, a combination of lower Bitcoin prices and weak production suggests that their revenue will continue to decline, while the mark-to-market value of their holdings will also drop. Marathon Digital, Riot Platforms, and CleanSpark hold 25,000, 9,334, and 7,052 coins on their balance sheets.

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Bitcoin and altcoins rise as NFP data point to a large rate cut

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Cryptocurrency prices rose slightly after the U.S. published another weak nonfarm payroll report.

Bitcoin (BTC) rose to $56,500 while Ethereum (ETH) jumped to $2,400 on Friday, Sept. 6.

In the latest report, the Bureau of Labor Statistics showed that the economy added 142k jobs in August, lower than the median estimate of 164k. The bureau also revised the July figure from 114k to 86k. On Sept. 5, a report by ADP showed that the private sector created just 99,000 jobs in August. 

The unemployment rate slipped to 4.2% from the previous 4.3%, while average hourly earnings rose by 3.8%.

These figures indicate that the labor market is not performing well, as companies remain concerned about the economy. The manufacturing sector, in particular, is struggling, as reports from the Institute of Supply Management and S&P Global showed it remained in contraction mode in August. According to the BLS, 24,000 jobs were lost during the month. 

As a result, the NFP data suggest that the Federal Reserve may cut interest rates at its meeting on Sept. 18. There is a likelihood it could deliver a substantial rate cut of 0.50%, which explains why government bond yields have retreated. The 10-year yield fell to 3.75%, while the 30-year dropped to 3.9%.

Implication for cryptocurrencies

Bitcoin price | Chart by TradingView

In theory, cryptocurrencies and other risky assets perform well when the Fed is cutting interest rates. A notable example occurred in 2018 when the Fed raised rates from 1.25% in March to 2.50% in December, causing Bitcoin to fall by over 84% between its highest and lowest levels.

Bitcoin then rebounded by over 350% in 2019 as the Fed slashed rates by 0.75%. A similar trend occurred in 2020 at the onset of the pandemic when the Fed cut rates to zero.

At that time, Bitcoin rose to a record high of $69,000 before plunging in 2022 as the bank hiked rates.

A likely reason for this trend is that investors tend to have a higher risk appetite in low-interest-rate environments. If the Fed cuts rates, there is a possibility that some of the trillions of dollars in money market funds will rotate to risk assets like stocks and crypto.

However, there is a risk that Bitcoin and other cryptocurrencies could retreat since the rate cut has already been priced in by market participants.

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Bitcoin

Whale buys 2,000 Bitcoin in 4 days, now holds $490m in BTC

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A significant Bitcoin transaction was recorded on Sept. 2 when an investor purchased 1,000 BTC for $57.3 million.

This whale purchase marks the second time in four days that 1,000 Bitcoin (BTC) were acquired on Binance, bringing the total accumulation to 2,000 BTC. The investor currently holds 8,559 BTC, valued at $490 million.

The increase in Bitcoin holdings coincides with Bitcoin’s price dropping by nearly 8% over the past week as the markets enter September. Bitcoin briefly touched $61,000 on August 29 before slumping and almost touching $57,000 on Sept. 1.  

Historically, Bitcoin has experienced losses in six out of the last seven September months, with average losses of around 4.5% during those years.

Will the Fed cut interest rates? 

Despite this downward trend, an anticipated Federal Reserve rate cut could trigger a Bitcoin rally, according to QCP. Rising Bitcoin dominance, declining crypto exchange balances, and strong market fundamentals are positioning Bitcoin for a potentially bullish phase ahead.

On the flip side, Bitfinex analysts caution that Bitcoin may experience a significant decline of up to 20% due to uncertainty surrounding the Federal Reserve’s upcoming interest rate decision.

While a 25 basis point cut by the Fed could lead to long-term gains for Bitcoin by increasing liquidity, a more aggressive 50 basis point cut might trigger an initial price spike followed by a correction as recession fears grow. 

Will Bitcoin bounce back?

The amount of Bitcoin held on exchanges dropped to its lowest level this year, signaling low market liquidity and reduced investor movement of coins. 

This could lead to a Bitcoin bounce. Other potential catalysts for Bitcoin’s growth include a weakening US dollar, rising US public debt, and positive signals from the options market, which could push the price higher later this year.

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