Market update - August

Virtune's Newsletter - Highlights in the crypto market during August

August 2024 has been a month filled with turbulence and market uncertainty that left their mark on the crypto market. From a global stock market correction that spread rapidly to significant technical upgrades and legal victories, the crypto world has experienced both steep declines and potential upswings.

Bitcoin's halving cycle

Historically, each Bitcoin halving has resulted in significant price increases due to the reduced supply of new Bitcoins. While the halvings are not the only factor affecting the price, they have played a central role in shaping market dynamics and investors' expectations.

Despite a relatively widespread risk-off sentiment in the market during August, the current price trend is following previous cycles. In addition, we are witnessing increasingly broad institutional adoption of Bitcoin and crypto assets overall, leading many analysts to predict a continued positive price development for Bitcoin in 2024 and 2025.

Inflows into Bitcoin despite the decline
Despite a negative price development for Bitcoin during the month of August (-8.7%), the American Bitcoin ETFs saw net inflows of $88.5 million. This indicates  institutional investors have a long-term positive outlook on Bitcoin, despite increased short-term price volatility.

Additionally, the number of digital wallets holding 100 Bitcoins or more (so-called Whales) increased significantly during August and has now reached its highest level in 17 months.

The significant decline
The unexpected interest rate hike in Japan led to a rapid strengthening of the yen and a massive unwinding of the yen carry trade, causing major stock indices like the Nikkei 225, Nasdaq, and S&P 500 to plummet. The Nikkei 225 dropped a staggering 13.4% in a single day, the largest decline since Black Monday in 1987.

Polygon (MATIC) to POL
Polygon Labs announced a planned transition from the MATIC token to the new POL token, a change expected to enhance security and interoperability within Polygon's network through the AggLayer protocol. This upgrade is a strategic step to strengthen the network's functionality and market position.

Arbitrum plans to introduce staking
Arbitrum, a prominent Layer 2 solution on Ethereum, plans to introduce staking for the ARB token. This new feature allows users to secure the network and earn rewards, while simultaneously helping to stabilize the market and increase usage within the ecosystem.

Morgan Stanley expands its involvement in the crypto market
Morgan Stanley increased its investments in Bitcoin spot ETFs and also authorized its advisors to offer these ETFs to their clients, reflecting a broader acceptance of Bitcoin within the traditional financial sector.

Solana ETF speculations
After the SEC withdrew its attempt to classify Solana (SOL) as a security, speculations about the launch of a Solana-based ETF surged. This is expected to boost investor interest and liquidity within the Solana ecosystem, potentially strengthening its position in the market.

Ripple-SEC case concluded
The case between Ripple Labs and the SEC largely concluded in Ripple's favor, resulting in a temporary rise in the price of the XRP token. The verdict is seen as an important victory for the entire crypto sector, particularly for projects facing similar regulatory challenges.