Dispatch #195: The Bitcoin High

Jun 08 4 min read

Dispatch

In this patch of your weekly Dispatch:

First Cut Is the Deepest 🏛️
ETH before Its ETFs 🥁
A Violin on Blockchain 🎻

The Big Idea

It’s All About Discovering Prices

To the surprise of Dispatch editors, readers showed interest in the European Central Bank’s first interest rate cut in years. You can read more about it below, but for now – we are going to need more convincing that the Old Continent is starting to come out of this inflationary cycle.

This week, we are looking at good ol’ Bitcoin, where fittingly, much less convincing is needed – with BTC above $71,000 at publication close after an 18-day streak of positive U.S. ETF inflows there’s a lot to anticipate. Maybe not the biggest idea on Dispatch, but something tells us it’s been a big week for Bitcoin:

Marquette University professor David Krause suggests that other US states may join Wisconsin in investing in Bitcoin ETF. Krause touted Bitcoin as a "good investment" for state pension funds, citing its diversification benefits, potential for high returns, and role as an inflation hedge.

“A small bitcoin allocation may make sense regardless of your thesis on the cryptocurrency”, says Fidelity, in this CNBC report. Matt Horne, head of digital asset strategies at Fidelity, emphasized that while investors are developing their theories on Bitcoin, its track record suggests it can enhance long-term portfolios.

Bitcoin options traders are positioning for the cryptocurrency to hit new highs this month, according to market data, CoinDesk reports. Notably, calls for a decisive break of the $74,000 all-time high are gaining traction, suggesting bullish sentiment.

So, university professors and state pension funds along with the world’s largest asset managers have all started waiving the BTC flag. This got us thinking – has there ever been a better time to hold that Bitcoin stash and borrow funds against it? That’s the Big Idea this week.

The Latest In…

ECB’s Cutting Rates

As promised by the editors… The European Central Bank has cut interest rates by a quarter point to 3.75% for the first time in nearly five years. ECB President Christine Lagarde suggested more cuts could follow but emphasized they depend on economic data – inflation is expected to stay above the 2% target until late 2025. This cautious approach comes as figures have fallen since the last rate hike, but recent inflation and wage growth make another cut in July unlikely.

This rate decrease follows similar moves by central banks in Canada, Brazil, Mexico, Chile, Switzerland, and Sweden, contrasting with the US Federal Reserve and Bank of England, which are expected to maintain their current rates.

The Latest In…

All Eyes On ETH

We’re all hyped about spot Ether ETFs and when they will begin trading. Apparently, now it’s all down to the issuers and not the SEC, says the Commission’s Gary Gensler. Here’s what other big names have been saying this week:

ETH-based ETFs, expected to debut in the U.S. later this year, could attract up to $4B in inflows within five months, according to crypto analytics firm K33 Research. By comparing global ETH-based products and CME futures, K33 predicts these ETFs could accumulate 800,000 to 1.26M ETH, creating a supply crunch and boosting prices.
According to asset manager VanEck, ETH could soar to $22,000 by 2030, driven by its expanding role in disrupting traditional finance. The prediction is based on Ethereum's strong growth, with the network currently supporting 20M monthly users and facilitating $4T in annual transactions.

The Latest In…

A Stradivarius Тurns into an NFT

In a symphony of innovation, a 316-year-old Stradivarius violin, once owned by Russian empress Catherine the Great, has been transformed into an NFT. Hong Kong entrepreneur Yat Siu purchased the violin for over $9M and it now serves as collateral for a multi-million-dollar loan alongside its NFT counterpart. While no formal plans exist for fractional investment, the violin remains securely stored in Hong Kong. Siu, who has a background in classical music, expressed excitement about merging his technological expertise with his passion for music.

Blockchain technology bridges the physical and digital art worlds, opening possibilities for trading, lending, and fractional ownership – surely a decent challenge for Nexo’s blockchain team?

The Week’s Most Interesting Data Story

To Be In Profit or Not to Be?

Most Bitcoin holders are currently sitting on profits, indicating renewed interest after a period of stagnant prices. Short-term holders are bearing most of the market losses, which is common during corrections in bull markets. Both long-term and short-term holders have seen a reset in their sell-side risk ratio, signaling a new balance in the market, Glassnode analysts point out.