Morning Crypto Briefing: Equity Rally Supports Crypto Into Weekend, BTC in Mid-$21Ks, ETH Above $1.2

Key Points

• A strong finish to the week for US equity markets has given cryptocurrencies positive momentum into the weekend.

• Bitcoin was last trading in the low $21,000s and Ethereum was above $1,200 amid broad altcoin outperformance.

• FTX is in talks to acquire a BlockFi stake while Goldman Sachs is looking to scoop up distressed Celsius assets.

State of the Market

US equity markets rallied hard into the weekend, with the S&P 500 ending Friday trade over 3% higher, taking its weekly gains to nearly 6.5%. Market commentators cited an unexpected decline in a measure of US consumer inflation expectations that is closely followed by the Fed as easing fears about excessive monetary tightening from the US central banks, thus supporting the rally in equities. Throughout the week, rising bets for a near-term US recession were also cited as broadly supporting risk appetite in equity markets, with market commentators arguing that given weaker growth with lower inflation and reduce pressure on the Fed to tighten so aggressively.

The key takeaway here is that the improvement in US equity risk appetite has facilitated further upside in cryptocurrency markets, which have been closely correlated to stocks in recent months. As of Saturday, total cryptocurrency market cap was around $940 billion, up around $60 billion this week and up over 23% versus last weeks lows around $760 billion.

Bitcoin is currently trading with a positive bias in the mid-$21,000s and eyeing a break above earlier weekly highs in the upper-$21,000s. Any such break could facilitate a push higher towards the 21-Day Moving Average in the low-$24,000s. Bitcoin‘s weekly gains currently stand at just over 4.0%. Meanwhile, altcoins are outperforming, indicative of buoyant crypto sentiment. As a result, Bitcoin’s crypto market dominance is on course to have dropped a further 1% to around 43.5% this week, down sharply from above 48% at the start of the month.

“This weekend could be another testing period for the cryptocurrency (Bitcoin), despite the resilience shown this week in holding back above such a major level,” Craig Erlam, senior market analyst at Oanda, said in a note on Friday. “Support still looks shaky below and another break could see confidence in the space really put to the test,” he warned.

Ethereum broke above $1,200 on Friday and is currently holding above this level, taking weekly gains to about 8.5%. If the worlds second-largest cryptocurrency by market cap can break above resistance in the mid-$1,200s per token, the door is open for a push towards the 21DMA near $1,350. Shiba Inu, meanwhile, has been the best performing top 20 crypto in the last 24 hours, according to CoinMarketCap, with gains of over 12%, taking SHIB/USD to around $0.0000115. Avalanche and Solana are the next best top 20 performers, up around 7.5% in the last 24 hours each.

Next week is set to be a busy one for big US data releases and Fed commentary. Durable Goods Orders and more housing data is out on Monday, followed by a widely followed Consumer Confidence survey on Tuesday. Fed Chair Jerome Powell and a few other of the bank‘s policymakers will be orating on Wednesday, followed by the release of May Core PCE inflation data on Thursday (this is the Fed’s favored inflation gauge). Finally, the Institute of Supply Managements widely followed Manufacturing PMI survey is set for release on Friday.

The playbook for stocks and crypto markets right now appears to be that worse economic data (anything to increase recession bets) and anything to suggest easing inflation is good for risk appetite. This is likely to be the case next week.

Crypto Winter: FTX in Talks to Acquire BlockFi Stake, Goldman Looking To Buy Celsius Assets, Bitpanda Slashes Headcount

According to a report by the Wall Street Journal on Friday, one of the worlds largest and fastest-growing crypto exchanges FTX is in talks to acquire a stake in crypto lending/borrowing platform BlockFi. The move would deepen the financial relationship between the two firms after FTX gave BlockFi a $250 million emergency credit line earlier this week. BlockFi has suffered in recent weeks amid the downturn in cryptocurrency markets and recently announced that it would be laying off 20% of its staff.

However, the platform announced on Friday that it would be increasing deposit rates across a range of cryptocurrencies and stablecoins effective as of 1 July. BlockFi cited effective risk management, a decrease in market competition and a changing macro environment as facilitating the increase to deposit rates.

Elsewhere, US mega-bank Goldman Sachs is reportedly looking to raise up to $2 billion from investors in order to scoop up distressed assets from beleaguered crypto lending/borrowing service and (former？) BlockFi competitor Celsius Network, which froze all withdrawals 12 days ago amid what it called “extreme market conditions”. As of the end of May, Celsius had $12 billion in assets under management and had lent out more than $8 billion.

According to a WSJ report on Friday, Celsius has hired restructuring consultants from Alvarez & Marsal to advise on a potential bankruptcy filing.

Meanwhile, one of Europe‘s largest crypto exchanges Bitpanda has announced in a blog post on Friday that it is to slash its headcount by more than 25% to a target of 730. According to LinkedIn, the company employs more than 1,000 workers at present. The exchange’s founders cited the recent deterioration in market conditions as behind the decision and said their prior fast expansion pace was a mistake.

Sticking with exchanges, the worlds largest crypto exchange Binance announced on Friday that it is to launch a new advanced platform for professional investors which will be called Binance Institutional. Binance said its new platform will offer over-the-counter liquidity, algorithmic trade execution, instant pricing, advanced digital asset custody solutions and more.

Binance has proven thus far to be one of the most resilient crypto firms amid the ongoing market downturn. As many rival exchanges cut workforces, Binance CEO Changpeng Zhao said that the company will continue to hire. The company this week announced that it would eliminate spot Bitcoin trading fees on its Binance.US platform in order to attract more users. On Friday, Zhao said the company is looking at 50 to 100 deals from crypto businesses given recent market turmoil.

Other Crypto News: US SEC Approval of Spot Bitcoin ETF Unlikely Analysts Say, Sky Mavis Starts Reimbursing Ronin Hack Victims

Whilst some crypto market commentators said this week that the recent narrowing of the GBTC discount to the Bitcoin price might indicate a build-up of expectations for the US Securities and Exchange Commission (SEC) to approve a spot Bitcoin Exchange Traded Fund (ETF) soon, other analysts remain downbeat. Upcoming SEC decisions on 29 June and 6 July on applications from Bitwise Bitcoin ETP Trust and Grayscale Bitcoin Trust are both “highly unlikely” to secure approval, argued Bloomberg Intelligence analyst James Seyffart in an interview with CoinDesk.

According to Seyffart, the SEC has made it clear what it wants to see before it gives the green light to any spot Bitcoin and approval isn‘t coming until “a ’market of significant size‘ has surveillance-sharing agreements or is regulated by the likes of the SEC or CFTC”. Until a “spot Bitcoin exchange or likely multiple spot bitcoin exchanges come under the purview of the SEC and/or CFTC, the SEC isn’t going to approve a spot bitcoin ETF,” he told CoinDesk.

The ETF Store President Nate Geraci expressed a similar sentiment. “The overwhelming market assumption is that the SEC will disapprove these ETFs,” Geraci commented, noting the lack of regulatory oversight of crypto exchanges.

Elsewhere, play-to-earn game Axie Infinity creator Sky Mavis announced that it will begin the process of reimbursing victims of a $625 million hack of its Ronin bright from 28 June. Back ion March, hackers took 173,600 ETH and $25.5 million in USDC. Ethereums sharp decline in recent months means Sky Mavis will only end up returning crypto worth $216.5 million to hack victims.