How Safe is your Bitcoin in this Macro Environment

Gm friends,

The bigger crypto gets, the more that wider factors like the macro environment and party politics start to exert an influence on the market.

That’s especially the case right now, with economic uncertainty in the air and the US election nearing, so let’s try and navigate the landscape with a look at how the latest US jobs data has affected bitcoin.

But, before we get into today’s newsletter, just a quick reminder.

Yesterday, we sent an exclusive email to our waiting list subscribers about the official opening of The Inner Circle—our highly anticipated Discord Community.

We even included a special bonus to thank you for your patience and enthusiasm.

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The Inner Circle is designed to empower you with the knowledge and support you need to excel in the volatile world of crypto investing.

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Check your inbox now, open it, and discover how The Inner Circle can transform your investing approach with unparalleled support and community insights.

Now let’s see what’s in today’s issue:

• Sam shares his thoughts on US jobs report hitting Bitcoin, Crypto Punks are back, Ripple’s Co-founder endorsing Kamala Harris for President, Ethereum Foundations 10 year runway & VanEck closing its ETH futures ETF.
• Crypto Portfolio update for week 30.
• This week on chain.
• This week’s trending coins by Rebecca.

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US Jobs Report Hits Bitcoin

The BTC price took a knock last week with the release of the latest US employment data. In summary, August non-farm payrolls data showed 142,000 jobs added to the economy, which is significantly fewer than the 163,000 that had been expected by polled economists.

That wasn’t great, and to make matters worse, the previous figures for June and July were also revised down by a combined total of 86,000 jobs, suggesting an extended period of weakness in the labor market.

However, it wasn’t all bad, as on the other hand the unemployment rate fell from 4.3% to 4.2%, in line with expectations. Still though, markets weren’t happy, and BTC fell to a one month low, briefly dipping below $53,000, while stocks also reacted, with the NASDAQ dipping by 2.6% and the S&P 500 by 1.7%.

So all-in-all a mixed bag–not disastrous, but don’t forget that this is occurring with fears of a recession still tangibly present, and as a result it all raises questions about what’s next for bitcoin.

Importantly though, against this ominous backdrop there are some positive crypto catalysts lining up for the end of the year, most notably: incoming rate cuts (with a 25 or 50 bps cut currently expected), volatility around the US election and the possibility of a new pro-crypto administration, and also there’s the historical trend for a stronger Q4 during a halving year, while the spot BTC ETFs offer rails for bitcoin exposure to traditional investors.

CryptoPunks Are Back!

In the last crypto cycle’s insanely fun NFT bull run, CryptoPunks became arguably the most iconic collection around, setting the template for newer PFP drops such as Bored Ape Yacht Club and Azuki.

And if you were wondering what happened to Punks, the good news is that right now they’re looking like they might be back.

Diamond-handed holders will argue they never really went away, and while it’s true the lowest the floor price briefly dipped to was around 20 ETH at the beginning of August–which is a lot more than the zero ETH Punks cost when they first minted back in 2017–that’s still a big drop from the 114 ETH ATH in 2021.

Currently though, not only is the floor back up to around 30 ETH, but also there have been some rare items changing hands for big price tags, including–over the past week–two Zombies (priced at 240 ETH and 475 ETH) and an Ape (priced at 620 ETH).

But what do you think, are we just witnessing a few ETH-rich OG JPEG stackers splashing some cash, or is this a positive sign for the NFT market overall, and if so, which other collections might do well from here? Reply to this email and let us know what you think and whether you’re buying.

Ripple Co-founder Endorses Kamala Harris for President

The last few months have seen crypto becoming increasingly political, due to Republican presidential candidate Donald Trump taking a fully pro-crypto stance.

That means a lot of people in the crypto industry–and anyone else who wants crypto to succeed in the US–are backing Trump for the win, but in an unexpected twist, Ripple co-founder and Executive Chairman Chris Larsen has endorsed Democrat candidate and current VP Kamala Harris in her run for the presidency.

Larsen backed Harris by signing a joint letter alongside 87 other corporate leaders, including James Murdoch, Mark Cuban, Reid Hoffman, and the CEOs of companies such as Yelp and Snap.

The letter claims that Harris will “continue to advance fair and predictable policies that support the rule of law, stability, and a sound business environment”, which sounds nice, but from a crypto perspective doesn’t really square with the hostile attitude the SEC, under the current administration, has taken towards the crypto industry.

And looking at the possible election outcomes from a price action point of view, a Trump win is likely to act as a positive catalyst for the crypto market, with the latest analysis from Nate Silver showing Trump taking the lead overall and in seven key swing states–sometimes by a very wide margin–while Polymarket gives overall odds of 52% for Trump and 46% for Harris.

Ethereum Foundation Reveals Approximate 10-Year Runway

Over in a Reddit-based AMA session that took place on September 5th, Justin Drake–who is a researcher at the Ethereum Foundation–revealed some interesting information about the Foundation’s finances.

According to one reply from Drake, the Foundation holds ETH currently worth around $650 million, and its funds give it an approximate runway of ten years.

However, that’s based on current ETH prices, and so these estimates could vary by a lot over the coming years. It’s also notable that the Foundation always ensures that it has a fiat buffer to cover a couple of years of runway.

Notably, on September 6th, the Ethereum Foundation transferred 1,000 ETH (currently worth around $2.4 million) to a multisig address that is then, based on previous behavior, expected to convert the funds into the stablecoin DAI.

VanEck to Close ETH Futures ETF

With VanEck having launched its spot ETH ETF (ETHV) in July, it has now made the decision to shut down its ETH futures ETF (EFUT), which was launched in October last year. Investors have until the close of market on September 16th to sell their EFUT shares, after which VanEck will be liquidating the fund’s assets and remaining shareholders will receive a cash distribution equal to the value of their shares.

Overall then, this move gives the impression that the ETH futures ETF served its purpose, but is now more-or-less obsolete as the newer spot ETF will be the go-to VanEck product for investors looking for ETH exposure.

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Week 30 Crypto Portfolio Update

No updates this week

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In line with ongoing chop in the crypto markets, last week brought a second consecutive week of negative overall flows for the spot BTC ETFs, with total outflows for all funds across the week reaching $706.1 million.

We’re also seeing that it’s short-term holders who are being shaken out and offloading coins, as this cohort has now sold over $36 billion worth of BTC since around the middle of August.

This ties in to scores on the Fear and Greed Index, which dipped down to 22 (classed as Extreme Fear) last week, having been as low as 17 when the BTC price dropped to 49K in the first half of August.

Putting that in perspective, the 10% reading on the chart was a result of the China bitcoin mining ban, and the 6% score marks the Terra/Luna collapse.

Some interesting data from CryptoQuant shows that the number of Bitcoin UTXOs in profit has dropped from 99% in June to 68.5% this month.

This indicates that traders have been taking profits, meaning there has been selling pressure, which corresponds with the BTC price moving down in a range over the past several months.

However, the last time this deep a drop in profitable UTXOs occurred, it was followed by BTC rising in price from below $27,000 to a new all-time high above $73,000. Of course, there are many other variables to consider, but it’s something to keep in mind.

Also, were you aware that BTC has been trading for longer than the fiat stock market? Well, kind of, anyway–depending on how you look at it.

This outlandish claim can be made because BTC–which, unlike stock markets, is in operation 24/7, all the time–is now approaching 124,000 active trading hours since its first exchange (BitcoinMarket) launched in 2010, while the stock market has had nearer to just 101,000 active trading hours since the Nixon Shock of 1971, when the US dollar’s convertibility into gold was ended.

Moving on to take a look at Ethereum and the new spot ETH funds, as with the bitcoin products, the ETH ETFs also marked the beginning of September in bearish fashion with another week of overall negative flows, last week registering total outflows of $91.1 million.

What’s more, the amount of ETH that is available on exchanges has taken an upward trajectory in September, and last week rose to 18.8 million ETH, which equates to an increase of more than 263,000 ETH since the end of last month, and suggests the possibility of increased selling.

Layer-2s are core to Ethereum’s future as it scales and expands, and it’s now becoming clear how that set-up will look, as numbers of transaction counts on Layer-2s have become much higher than on Ethereum.

And in fact, this trend appears to be accelerating, with a big jump in Layer-2 transactions across Q2 this year, and with Base in particular showing strong growth.

And speaking of Base, when it comes to Circle stablecoins on the network, there is plenty of bullish-looking growth. USDC supply on the Layer-2 surged from March to the end of May, stayed steady, and appears to be moving upward still, while EURC has been showing a steady increase in supply, although on a smaller scale–the USDC supply is above $3 billion, while EURC is at a little under $12 million.

There is also steady month-on-month growth in stablecoin transfer volume, while the number of stablecoin senders has declined since June, but is still up considerably compared with at the beginning of the year.

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Here are my key takeaways from the trends this week and despite the price action being in the toilet, there’s a ton of good stuff happening below the surface.

• Simon’s Cat is a memecoin on BNB Chain that’s dropped over 8% following its CAT token airdrop.
• APES is an AI utility token on Solana that’s teasing a new exchange listing after being listed on Bitget in June.
• Sui is a Layer-1 blockchain that’s launched the AUSD stablecoin on the network. Sui’s total value locked (TVL) has also hit the $600 million mark.
• Solana is a Layer-1 blockchain that’s seen its CHEWY memecoin jump 30% after Roaring Kitty posted a cryptic post on X. Solana has also announced its first node sale in the ecosystem.
• Dogs is a memecoin on TON that’s distributed over 40 billion DOGS tokens within 48 hours for its airdrop launch. Binance is due to launch futures trading for DOGS on September 10 with 20x leverage.
• Neiro on ETH is a memecoin that’s been featured in a post from Matt Wallace on X. Neiro futures have also been listed on HTX exchange.
• Bittensor is a decentralized machine-learning protocol that’s increased its subnet limit from 45 to 52.
• Ondo is a Real-World Assets (RWA) platform that’s lowered the minimum investment required for instant OUSG transactions.
• Kaspa is a proof-of-work blockchain that’s launched its ambassador program and has already had over 80 applications in 24 hours.
• POL is Polygon’s upgraded token which was previously MATIC. Polygon has launched its Miden Alpha testnet v4.
• Toncoin is a Web3 ecosystem within Telegram messenger that’s reached 1 billion completed transactions on the network. TON Foundation has also launched a 5 million Toncoin DeFi incentive program.
• Ethereum’s 10-year vision has been shared by Vitalik Buterin and he is optimistic about its future.
• Bitcoin has dropped to a one-month low after the US jobs data came in lower than expected. Arthur Hayes has closed his Bitcoin short position and predicts a rally is coming.
• Polygon is an Ethereum sidechain that’s completed its token upgrade from MATIC to POL. Polygon has also launched its Miden Alpha testnet v4.
• Render is an image and video rendering protocol that’s announced integrations with Dropbox and AWS S3.

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Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.

If you are reading this it means you are on the free version of the Wealth Mastery Investor Report, which is great for news and tips on the crypto markets.

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See you next time!

Lark and the Wealth Mastery Team

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Wealth Mastery (Lark Davis, and the Wealth Mastery writing team) are not providing you individually tailored investment advice. Nor is Wealth Mastery registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Wealth Mastery is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.

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