📢 August Signals

🗒️ Market update

Day 177, still range bound… Is time capitulation a real thing? It makes sense that new entrants buying at a new all time high could be more easily shaken out of the market, but the most important thing to acknowledge is patience is required for digital asset investing.  New participants typically learn this the hard way, buying highs, and selling at local bottoms. Patience is quickly learnt over cycles, and even within them, just last year we endured a 7 month range bound period that ended with a 5 month 170% rally, it does feel like we could see something very similar to close out this year.  We might have to wait for the seasonally weak northern hemisphere summer period to end first, but maybe not.   

More recently risk assets have been rallying as the macro environment eyes increased liquidity and rate cuts, gold has reached a new all time high, over US$2,500 an ounce, and bitcoin still won’t break out.  Macro is clearly not in the driving seat so something more endogenous is at play. German Government, US Government, Genesis, Mt. Gox have all been either selling, moving or distributing significant quantities of Bitcoin over the last couple of months.  Mt. Gox just moved another 13,000 Bitcoin to BitStamp for distribution to creditors, that takes the Mt Gox stack down from 140,000 to 34,000, one of the largest overhangs in BTCs history is about to come to an end.  Genesis returned around 30,000 BTC (~US$2Bn) to creditors earlier in August and is also done, the German government have no more BTC to sell.  This additional sell pressure has been soaked up but also kept a lid on BTC momentum.  Michael Saylor’s Microstrategy is poised to purchase and additional US$2bn of BTC any day now, and may be the catalyst to break out and play catch up on other asset classes, or perhaps a more accommodative commentary from Jerome Powell at Jackson Hole later today.

ETH ETF demand has not been able to keep pace with Grayscale’s ETHE outflows, in contrast to BTC ETF demand vs GBTC outflows, as illustrated by the bright green line below. 

The bitcoin fear and greed index (a sentiment-based index) has reset, note periods of high ‘fear’ have historically been very good times to buy.  This week the fear and greed index tanked as low as 25 signifying extreme fear, we have not seen these levels of ‘fear’ since around the FTX bankruptcy event. The right axis represents fear/greed based on colour and is plotted on a price scale referencing the left axis.

US jobs data, probably the single most referenced pillar of strength in the US economy over the last 2 years, has just been revised down by a record 818,000, strong Non-Farm Payrolls data has been beating expectations for around 2 years now.  We have questioned the calculation methodology in the past as somewhat arbitrary, particularly the company births/deaths component, and have now seen downwards revisions of 1.2 million jobs over the last 2 years, will the next data point come under more scrutiny on 6 September and will the Fed factor this into their rate setting stance? 

Not only is crypto becoming a key election issue it has also facilitated a new use case for crypto, prediction markets.  To date US$700m has been place on the outright winer of the election via Polymarket, it also offers a new tool to monitor real-time odds/probabilities of the outcome, in a potentially more reliable manner than the existing polling process, which has become increasingly less accurate in recent years. 

 Key dates to watch

• 23 August – Jackson Hole – co-ordinated messaging from global central banks (BRRR?)
• 29 August – US GDP Q2 2nd estimate
• 30 August – Inflation data – Core PCE 
• 4 / 6 September – Job Opening / Non Farm Payrolls 
• 11 September – US CPI print
• 18 September – FOMC (market is currently split between a 0.25 and 0.50 cut)

⚒️ Headlines

• USDC Tap-to-Pay on Apple iPhone ‘Incoming Soon’: Circle CEO
• How Robert F. Kennedy Jr.’s Exit From Presidential Race Could Raise Crypto’s Profile in Washington
• Another Solana ETF Approved in Brazil—What About the US?
• Spot Ethereum ETFs record longest outflow streak amid drying investments
• Trump Extends Lead Over Harris on Polymarket Despite Polls

💡The GSOL Phenomenon: Why Grayscale’s Solana Trust Trades at a 700% Premium

The Merkle Tree Capital “Why?”

We know accessing the digital asset sector is challenging, presenting a new set of risks that most investors are not familiar with, and there is a lot of sub-standard information flying around. That is why we created an actively managed unit trust aiming to hold the best digital assets that will form the basis of the ecosystem over the next 5-10 years.

Investors can now access this new asset class without concerns around self-custody or dealing with unknown counterparties, simplify their tax reporting, avoid single asset risk, maximise yield, and access institutional risk management and portfolio construction.   

SMART – actively managed, enhance risk adjusted returns, sophisticated portfolio construction, staking yield, simple exposure – no passwords or digital wallets

SECURE – institutional custody, staking in cold storage, insurance, counterparty due diligence 

CRYPTO – Blockchain eliminates intermediaries, lowers costs and improves efficiency by bringing transparency and security.