Bitcoin rallied towards the end of the week after a surprise move by BlackRock that gave a much-needed boost of confidence to the crypto industry, which has been struggling under the weight of SEC measures for several weeks. Bitcoin ended the week slightly down, down 0.21%, at $26,355.04. Coin Metrics measures a week in cryptocurrencies traded 24 hours a day, starting Friday to Friday at 4:00 p.m. ET. This was the second consecutive negative week for Bitcoin. Traders were optimistic after BlackRock, the world’s largest money manager, applied for a spot bitcoin ETF after Thursday’s bell. The price reaction was initially muted as many traders questioned why they should make the move now when just a week earlier Coinbase, the crypto custodian in BlackRock’s proposed Bitcoin ETF, was sued by the SEC for violating securities laws. On Friday, however, optimism spread. “A lot of what’s driving crypto prices is just expectations of what it can be used for,” said Gustavo Schwenkler, an associate professor at Santa Clara University’s Leavey School of Business. “Right now, it’s not entirely clear what kind of use cases cryptocurrencies will adopt in the future. If institutional funds were allowed to flow into cryptocurrencies, it would introduce a new way of using cryptocurrencies that is not currently available, and I can imagine prices going up. “If this is approved, it will change the perception of what crypto is good for, and that could really impact the valuation of bitcoin and other cryptocurrencies,” he added. A moment of relief. Bitcoin was up about 4% on Friday, but the rest of the week wasn’t as sunny. Price action was subdued earlier in the week, and on Wednesday bitcoin briefly fell to a March low. “FOMO has completely disappeared from the market,” said Mark Connors, research director at 3iQ. “Even though the tourists are gone and we’ve seen some bitcoin dominance… there’s a lot of headwind.” “We’re reviving the recession-like concerns,” he added. “You see it in the macro data, in the price data, it’s very low on the major holders, and on the exchanges you see, the next level isn’t there because the volumes aren’t there.” Bitcoin fell after the June session The Federal Reserve fell below $25,000 for the first time since March. The central bank refrained from raising interest rates in June, but Fed Chair Jay Powell said there could be two more hikes this year. The SEC’s lawsuits against Coinbase and Binance last week also continued to weigh on investors. “Bitcoin and digital assets have produced some of the best returns of any asset class in 2023 and inflows are minimal to declining,” Connors said. “This divergence, where yields aren’t pulling dollars, is a strong indicator of sentiment, and it’s one of the reasons we’re in the bottom quartile of sentiment for this asset class.” Bitcoin’s recent declines may not be solely due to macroeconomic and regulatory ones Headwinds, said Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank. According to Glassnode, the recent movement of bitcoin from miner wallets to exchange wallets peaked late this week, and the amount of bitcoins sent to exchanges is at levels not seen since October 2021. “It suggests that miners’ profitability from Bitcoin’s block reward could fall due to the decline in coin price and increasing mining difficulty,” Hasegawa said. “They are slowly selling off their bitcoin holdings, thereby limiting bitcoin’s upside potential.”
