Weekly summaries with Sebastian Seliga from the zondacrypto exchange are our new tradition. Here is another article from this series.
Bitcoin and ether
Bitcoin (BTC) continues to rally, buoyed by expectations of potential Fed rate cuts. Ethereum (ETH) is also showing stability, with a growing number of active addresses, suggesting continued user engagement in the network’s ecosystem.
Inflation in the USA
Ahead of the upcoming FOMC meeting on September 18, the market is speculating on possible rate cuts, with 100 basis points of cuts expected by the end of the year. The CPI forecast for July is for inflation to remain at 3.0% year-over-year, with core CPI expected to fall from 3.3% to 3.2%. The challenge for the Fed is to balance stimulating the economy while controlling inflation, which is causing uncertainty in markets.
AI Tokens: Growth Driven by Nvidia Report
AI-related tokens such as wTAO, FET, RENDER, PRIME, and EMC gained value after Nvidia posted positive financial results. wTAO in particular attracted attention, recording a 104.9% increase in “Smart Money” balances, indicating increased activity from large players.
The rise in popularity of memecoins
Memecoins like Mog, NEIRO, KOIN, TRUMP, and XMAGA continue to enjoy popularity in volatile market conditions, offering buying opportunities on dips. Dog-related tokens like SUNDOG have also gained value, suggesting continued investor interest in this market segment.
The situation in ETFs on ETH
U.S. ETH ETFs saw $5.9 million in net inflows on Aug. 28, following nine consecutive days of outflows, according to data from Farside Investors_. Grayscale Ethereum Trust (ETHE) saw $3.8 million in outflows, the smallest amount leaving the fund since the ETFs debuted in the U.S. on July 23.
BlackRock’s iShares Ethereum Trust ETF (ETHA) saw $8.4 million in inflows, its first such move after five days of inactivity. Fidelity Ethereum Fund (FETH) added $1.3 million.
ETHA has not recorded a single day of outflows since its launch, despite neutral flows on nine of the 27 trading days. Meanwhile, outflows from ETHE may be stabilizing as the amounts leaving the fund have been gradually decreasing since August 22.
Since launch, US ETFs have registered negative net flows of $475.7 million. However, excluding the $2.55 billion in outflows from ETHE, these funds have already exceeded $2 billion in inflows in just 27 trading days. Interestingly, if the value of ETH ETFs is considered as a single product, this would be the fourth largest ETF debut in history. It would be outpaced only by select BTC ETFs.
ETHA is currently the largest ether ETF, with over $1 billion in inflows to date, making it the seventh-largest ETF debut. Fidelity Ethereum Fund (FETH) and Bitwise Ethereum ETF (ETHW) have the second and third largest inflows, respectively, with $392.9 million and $314.1 million.
BTC and ETH Options
The BTC and ETH options market continues to show some caution, with short-term puts dominating, while long-term calls remain attractive. BTC is showing a predominance of short-term puts, while long-term calls are trading at a premium.
Flows in digital asset markets
Investors used the recent price declines as a buying opportunity, resulting in $176 million in inflows into digital investment products. Ethereum saw the largest inflow, at $155 million, showing that it remains an attractive asset for investors looking for value after a market correction. Despite last week’s challenges, the total cryptocurrency market capitalization has shown resilience, rebounding from earlier lows. Bitcoin is up 61.1% year-to-date, while ether is up 41.8% in 2024.
El Salvador: Successes and Challenges of Bitcoin Adoption
El Salvador President Nayib Bukele revealed that the country has gained about $265 million after adopting bitcoin as its reserve and means of payment. El Salvador has invested $135 million in bitcoin ($400 million today). Bukele emphasized that Salvadorans who have adopted bitcoin have also seen significant gains, thanks to the appreciation of the currency this year.
According to Nayibtracker, El Salvador holds 5,856 BTC, with an unrealized profit of over $50 million. In addition to financial gains, Bitcoin adoption has increased the financial inclusion of many Salvadorans. Bukele noted that many Salvadorans use Bitcoin, and most major businesses in the country accept payments in the cryptocurrency, and emphasized that Bitcoin adoption has brought only benefits to El Salvador, such as attracting investment, increasing tourism, and improving the country’s international image. He also noted that the involvement of major financial funds such as BlackRock underscores the growing importance of Bitcoin in the global financial system.
The situation of Pavel Durov and Telegram
Telegram CEO Pavel Durov was arrested and later released on bail in France, ordered to pay €5 million bail and banned from leaving France. He was charged with six crimes, including complicity in managing an online platform that facilitates illegal transactions, money laundering, and refusing to cooperate with authorities. The investigation was launched by French authorities after Durov failed to respond to court requests related to suspicions of organized crime.
French prosecutors have stressed that the investigation also includes the French government’s failure to register Telegram’s encrypted messaging service. Durov, known for defending free speech and resisting content moderation, has faced criticism from child safety groups who say Telegram has become a hub for illegal content and that it is failing to adequately cooperate in combating it.
Durov’s arrest has sparked a backlash from free speech advocates and the tech industry, who have criticized the move as a human rights violation. Some have suggested that French authorities are trying to control communications on Telegram, although President Emmanuel Macron has denied that the arrest was politically motivated. The TON community has formed a DAO to defend Durov and published an open letter calling for his release.
Summary
The cryptocurrency market remains volatile, with expectations of possible Fed rate cuts in September. Investors are increasingly turning to income-generating products like staking over traditional ETFs. The events surrounding Telegram and the situation in El Salvador show that cryptocurrencies and blockchain continue to have a huge impact on the global economy and financial system, even as they remain a source of controversy and regulatory challenges.
