Gold, Stocks, and Bitcoin: Weekly Overview – July 1

This week’s price movements for bitcoin (BTC), gold, and, our wildcard, the Grayscale Bitcoin Fund.

Bitcoin

While bitcoin sank precipitously during the first half of June, over the past two weeks it has been settling around $20,000. On June 16, BTC was trading around $22,500, but dropped quickly over the next two days, hitting $18,000 by June 19.

Buying pressure then returned, bringing it above $21,500 by June 21. The next day it sank again, this time just below $20,000, before rising again slowly the next few days, back to $21,500 by June 26.

From there it cascaded back downwards, hitting below $19,000 on June 30. BTC spiked on July 1, but is currently trading just below $19,500.

With the completion of June, bitcoin just finished its worst month on record, losing more than 38% of its value. Confidence in the crypto market, more generally, has been rocked in recent weeks as major companies face solvency crises and layoffs.

For instance, prominent crypto hedge fund Three Arrows Capital defaulted on a loan worth more than $670 million earlier this week. Shares of Coinbase, which was forced to lay off nearly one-fifth of its workforce, fell about 40% in June, the fourth consecutive negative month.

“There is still an aspect in crypto that we are waiting to see if another shoe will drop, if another entity will fail, if the credit cascade will continue,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “I think we have to get through the Fourth of July weekend and get through that quiet period in the market before we build in the second half of the year.”

Gold

Gold trended moderately downwards the past two weeks. Trading around $1,835 on June 16, the price of gold dips before spiking up above $1,855 by the next day. From there it trickles down once again to $1,825 by June 22. Despite a pair of spikes over the next two day, and ones on June 27, 29, and 30, gold continued its downwards trend, hitting $1,790 earlier today, but is currently trading around $1,800.

Gold extended its retreat to a third straight weekly dip as a stronger dollar and prospects of higher interest rates eroded its appeal. Additionally, an import tax hike by India has also seen dampening demand for bullion. The European Central Bank is also likely to start raising rates this month. “Despite the current risk-off mood and with financial markets a ‘sea of red’, the go-to safe haven just now is the U.S. dollar”, rather than precious metals, said independent analyst Ross Norman.

Grayscale’s Bitcoin Trust

Similar to the crypto markets overall, Grayscale’s Bitcoin Trust has seen a steady decline over the past two months. At the beginning of May, GBTC was trading just above $25. After a bump up to $27 on May 4, it fell down to roughly $18 by May 12. Over the next month, GBTC channeled between $18 and $21, before seeing volume spike on June 13, resulting in a gap down to $15. GBTC has not fared much better since then and is currently trading just above $12.

Earlier this week, the U.S. Securities and Exchange Commission (SEC) rejected the conversion of the Grayscale Bitcoin Trust into a spot bitcoin ETF. In its filing, the SEC said that the application did not demonstrate that it was not “designed to prevent fraudulent and manipulative acts and practices” and “protect investors and the public interest.”

In response, Grayscale Investments filed a lawsuit challenging the decision, which could be resolved late next year or early 2024. Grayscale, one of the largest institutional providers of cryptocurrency investments, had applied for the change last year.