While the weekly price was relatively stable, the volatility was no less than in previous weeks. Particularly, on the 5th, when former US President Donald Trump and Tesla CEO Elon Musk engaged in an extreme verbal dispute, the BTC price temporarily dropped to around $100,200.
On that day, approximately $1 billion in derivative positions were liquidated in the cryptocurrency market. Although it rebounded to the $105,000 range afterward, the fact that such a significant decline occurred due to issues not directly related to BTC is noteworthy.
BTC Buying Pressure Weakens... ETH Inflows Remain 'Steady'
Last week, BTC supply was somewhat ambiguous. While BTC miners, who typically generate selling pressure, have reduced BTC sales since June, the basic price level remains high, and buying pressure is struggling to gain momentum.
The US BTC spot ETF, which recorded a net inflow of $5.23 billion in May and was a solid BTC buyer, has recently been experiencing frequent net outflows. Even on days with net inflows, the inflow scale is significantly weaker compared to the past.
With the BTC price increase, holders' unrealized profits have significantly increased, leading to diagnoses that additional increases might be challenging. BTC has nearly reached the all-time high profit-taking threshold after breaking $110,000 two weeks ago. In such situations, large-scale holders tend to increase cash-out flows.
In contrast, buying funds flowing into Ethereum, the second-largest cryptocurrency by market cap, are steadily increasing. According to CoinShares data, $286 million in traditional financial funds flowed into Ethereum last week, which is the strongest inflow in a year and a half.
The US Ethereum spot ETF market has continued net inflows for 15 consecutive days. Some suggest that institutional investors, who previously invested in BTC, are now acquiring undervalued ETH. Consensys, an Ethereum infrastructure company, has also exceptionally bet $300 million on the ETH price increase, showing an aggressive buying stance.
The strength of Ethereum seems to be driven by expectations of the upcoming stablecoin activation bill in the US Senate. The Senate is expected to vote on the GENIUS Act, which contains comprehensive stablecoin regulations, as early as this week.
If this bill passes the House, the issuance of US dollar-based stablecoins is expected to surge. Since Ethereum is currently the most representative blockchain network for stablecoins, massive stablecoin adoption could potentially increase its value. Mobility company Uber has also indicated consideration of adding stablecoin payment options.
As stablecoin attention increases, major companies are actively moving. Circle, the issuer of USDC, the second-largest stablecoin, successfully completed its IPO on the New York Stock Exchange last week. Following Circle's successful IPO, rumors are circulating that Tether, the issuer of the top stablecoin USDT, could launch an IPO with a $500 billion valuation.
Last week, Lee Jae-myung of the Democratic Party was elected president. With the new government's formation, there's a mood in Korea connecting the stablecoin issue to the issuance of a won-based stablecoin. The idea is that since dollar-based stablecoins aim to strengthen dollar hegemony, Korea should also issue a won stablecoin for currency defense.
This expectation has grown further with Kim Yong-beom, former director of crypto research firm Hashed Open Research, being appointed as the policy chief in the presidential office of the Lee Jae-myung government.
CPI and PPI Announcements This Week, 10-Year and 30-Year US Treasury Auctions to Watch
Various inflation indicators will be announced in the US this week. On the 9th (Monday), the New York Fed's expected inflation figure will be released, CPI on the 11th (Wednesday), PPI on the 12th, and the University of Michigan Consumer Sentiment Index on the 13th (Friday).
As confirmed in last week's ISM Services Index, there's growing fear in the US service economy about rising wages and prices while new orders decrease. This is why many Fed officials have recently expressed stagflation concerns in public statements. In this context, this week's CPI figure is highly significant.
Considering the US long-term bond yields that have risen to risky levels, the US 10-year Treasury auction on the 11th and the 30-year Treasury auction on the 12th are also important events. If weak buying pressure is further confirmed in these auctions, significant volatility in risk asset prices could occur. We wish you all successful investments this week.
