Happy Times as XRP Ruled "Not a Security" and Inflation Continuing to Decline in U.S.

@ulriklykke

Author of the Bitcoin Global Macro, a newsletter focusing...

Credibility

US inflation cooled down to 3% in June, as per the latest CPI update by the Bureau of Labor Statistics. This is the lowest rate at which consumer prices have grown since March 2021, marking a significant drop from the highs of 9.1% in June 2022.

This news sparked optimism in the broader financial markets, pushing both the S&P 500 and Nasdaq to record new highs for 2023. However, the Core CPI, which is one of the most favored measures of inflation still sits at 4.8%.

In other words, things are moving in the direct direction but there’s still ground to cover to reach the 2% target, which is probably why the markets are anticipating yet another rate hike of 0.25% later this month.

Which Direction for Equities in H2 2023? 

Meanwhile, with inflation coming down for the 12th consecutive month, the question on most investors' minds is whether equities will continue to rally or if we are headed for weaker performance for the second half of the year.

There’s surely the case to be made that the markets have already risen a lot and that sentiment has become a little bit too positive for a continuous run upwards. However, as the macro picture continues to improve there’s also a probability that there’s still money on the sideline that is starting to feel FOMO over the strong trend for the beginning of the year. 

Big Portfolio Rebalance

Personally, I decided to de-risk my equities portfolio as I think there is little to no steam left in the machine in the short to medium term. Time will tell if I am right. I am still (butthole) long crypto assets as the risk-to-return are very attractive here and have the remainder of the entire portfolio in cash.

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Bitcoin Could Hit $120,000 By the End of 2024 

Bitcoin is still hovering above $30,000, and although it experienced a slight pump on the CPI release update, the momentum was short-lived.

But what's more interesting is a recent price projection by Standard Chartered, which estimates that BTC could hit $50,000 this year and reach as high as $120,000 by the end of 2024. This is an upgrade from the bank's $100,000 estimate as recent as April.

According to the report, this rally will likely be fueled by increased miner profitability. The rationale is that miners will soon be able to liquidate fewer Bitcoins as the price goes up, ultimately managing to meet their operational costs while holding on to more BTC.

This supply squeeze could reduce Bitcoin's supply by 250,000, bringing down its inflation rate from 1.7% to 0.4% year-to-year, according to Standard Chartered's analyst Geoff Kendrick.

In our letter from last week, we also highlighted a few trends that have in the past signaled the start of Bitcoin's bull run. While we may not be certainly headed for a rally, BTC is showing a considerable amount of strength, which could be a sign of accumulation.

Moreover, it is also noteworthy that the growing popularity of Bitcoin NFTs (ordinals) is another trend that is increasing on-chain activity and miner revenue. In Q2, Bitcoin ordinals trading volumes reached $210 million, up from $7.18 million in the previous quarter.

Noteworthy Mentions 

From June 28th to 30th, I had the opportunity to attend Blockchance, one of the biggest annual blockchain events in Northern Europe.

During the event, I represented Peanuds, and delivered a keynote presentation titled 'Deciphering Insights and Opportunities in the Crypto Market'.

Here's a brief recap article on how the event unfolded.

Industry Shakers 

XRP Price Jumps 37% as Ripple Scores Pivotal Win Against the SEC

In a significant decision, Judge Torres declared that Ripple's sales and other forms of XRP distribution do not meet the criteria of investment contracts, resulting in a remarkable 37% increase in the price of XRP.

Ripple CEO Brad Garlinghouse perceives this ruling as a triumph for the advancement of cryptocurrency innovation in the United States and remains optimistic about the favorable resolution of the remaining legal disputes.

Gemini sues DCG after conflict over unit's restructuring deal

Gemini, the largest creditor of bankrupt crypto lender Genesis, has filed a lawsuit against Digital Currency Group (DCG) and its CEO Barry Silbert. The legal action follows DCG's failure to reach a restructuring agreement by Gemini's deadline. The lawsuit alleges that DCG and Silbert misrepresented the accounting treatment of liabilities assumed from Genesis after losses caused by the collapse of Three Arrows Capital.

UK FCA Shuts down 26 crypto ATMs 

The UK's Financial Conduct Authority (FCA) has disrupted 26 out of 34 cryptocurrency ATMs inspected since the start of 2023. Following a warning in February, the FCA and law enforcement agencies investigated 36 crypto ATM locations based on anti-money laundering regulations. The FCA's joint executive director, Steve Smart, further cautioned against using crypto ATMs, as they may be operating illegally and could be facilitating transactions with criminals.

Binance market share takes hits with regulatory sh*tstorm 

Binance, the world's largest cryptocurrency exchange, and its U.S. affiliate have faced shrinking market shares this year due to regulatory crackdowns. The U.S. Securities and Exchange Commission's lawsuit against BINANCE has caused its global market share to drop from 60% to 52%, according to Kaiko data. Binance.US, has taken a bigger hit with its market share declining from over 22% in April to 0.9% on June 26 after customers were given a withdrawal deadline amid the SEC's asset freeze request.

Also published here.