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Hi Reader,
First of all, my apologies the Friday newsletter didn't get sent out after I hit send. It may have been to do with a patchy connection whilst travelling up to Queensland.
Moving on, the last week in crypto was an eventful one, let's dive in.
Weekly Market Snapshot
- BTC: $105,775 (~A$164,408) (+1.0%)
- Crypto Market Cap: $3.25T (+1.2%)
- Gold: $3,309/oz (+1.0%)
- S&P 500: 6,000 (+1.8%)
- ASX 200: 8,515 (+0.9%)
- 10-Year Treasury Yield: 4.5% (+2.5%)
Executive Summary
Crypto Market Sinks on Musk-Trump Feud
The value of the crypto market slid by as much as 5.5% over the last week before staging a sharp recovery. Bitcoin fell by 3.4%, with Solana (-7.6%), Ether (-7.1%), and XRP (-5.5%).
The main driver of the sudden decline was the seemingly overnight feud between Elon Musk and Donald Trump.
Since leaving his role as Head of the Department of Government Efficiency (D.O.G.E), Musk, whose Tesla shares were down by as much as 14.3% on the week, has been openly critical of the President's spending bill.
'The One Big Beautiful Bill Act' outlines tax cuts for corporations as well as on overtime work and tips, Medicaid, and green energy programmes.
However, the Congressional Budget Office (CBO) projects the bill will increase federal deficits by $2.3–$2.4 trillion over the next decade.
Our take: Trump has continued to endorse the bill and advocate for the removal of the federal debt ceiling, which looks to remove the spending caps placed on the US government.
If the bill is passed, and it seems likely that it will be, it will mean a worsening of America's debt position - which unironically we also believe will be a boon to Bitcoin's price.
Figures released earlier in the week showed that private sector jobs growth (37,000) came in well below forecast (120,000) which suggest the US economy is slowing.
The impact of tariffs will further increase the cost of living for Americans as well as the cost of doing business with America which is also likely to slow the economy further.
We agree with JP Morgan's view on a 50% probability of a US recession towards the second half of this year which elevates the risk of a drawdown in all asset types, not just crypto, if this happens.
Stablecoin Issuer, Circle Lists on NYSE at $22 Billion Valuation
Shares of Circle surged by more than 150% on its first day of trading on the New York Stock Exchange.
The Financial Times reported that the stablecoin market could surge from around $250 billion today to around $2 trillion over the coming years.
Used predominantly for cross-border remittances and payments, stablecoins offer a 24/7 cost-effective and faster means of transacting than the traditional banking system.
It's also a lucrative business for stablecoin issuers. In 2024, Circle earned $1.66 billion in interest on the US treasuries it buys to back the stablecoin.
Our take: Circle's IPO has given the company an initial valuation of ~$22 billion and is a testament to the fact that the digital assets industry is no longer coming, but in fact here.
Coinbase, Ripple, Tether, and Circle are all major contenders, with Ripple having recently attempted to acquire Circle for around $5 billion prior to its IPO.
Tether currently represents ~64% of the US dollar stablecoin market.
We expect to see significant growth in stablecoins due to the demand around the world, particularly in developing countries where access to the US dollar is typically limitied by the traditional banking system.
We're bullish on companies that list in this sector, although it could be an increasingly winner-takes-all market as users will not want to have to switch between different types of dollar, euro, or yen, etc.
So far, the US central bank seems to be content in letting private issuers provide the market with dollars as opposed to offering central bank digital currencies, a key point of difference between China and the US.
Ironically, Europe is moving ahead with its CBDC rollout programme, called the 'digital euro'.
Large Bitcoin Holders Have Been Taking Profits Since 2017
In a recent post by crypto analyst Willy Woo, he notes that Bitcoin whales, defined as holders of between 10,000 and 100,000 BTC, have been steadily selling their holdings.
During this time, the amount of Bitcoin held by whales has fallen from around 2.7 million BTC to around 1.6 million BTC.
Our take: Whilst this may sound alarming initially, it's important to note that the majority of these Bitcoin were acquired for around $0.1–$700.
In addition, the vast majority of this selling has been more than absorbed by institutions and ETFs, which now collectively own more than 1.2 million BTC.
Until next week,
James Brannan
Managing Director
BlockByte
james@blockbyte.com.au
https://blockbyte.com.au/
BlockByte does not provide financial advice. We provide a personalised brokerage service with tailored support, research and secure custody for investing in digital assets. Reach out to our team to discuss how we can help.
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