Summary of June 2023
Macro
In June, the Federal Reserve paused its interest rate hikes for the first time this year and continued reducing its holdings of Treasury securities. However, most of the committee members expected more rate hikes by the end of 2023, delivering a hawkish pause. On the other hand, the European Central Bank (ECB) raised interest rates by 25 basis points.
The US Treasury began funding the Treasury General Account (TGA) after a debt ceiling deal was reached in May. The TGA refill was mostly funded by short-term Treasury securities, and money held in Fed's Reverse Repo Program (RRP) contributed to most of the demand, alleviating the expected liquidity drain from the commercial sector (see Appendix A).
Crypto
In June, several significant events impacted the digital asset industry in addition to the FOMC and ECB interest rate decisions. On June 6th and 7th, the SEC sued Binance.US and Coinbase for unregistered securities offerings, and later on Robinhood delisted multiple cryptocurrencies in response to the lawsuit, triggering sell-offs.
A week later, multiple traditional finance institutions, including Blackrock, WisdomTree, Invesco, Bitwise, Valkyrie Funds, and Fidelity, submitted a Bitcoin Spot ETF application to the SEC, injecting bullish sentiment into crypto markets. On June 20th, Crypto Exchange EDX Markets backed by Fidelity, Schwab, and Citadel launched, enabling traders to trade Bitcoin ($BTC), Ethereum ($ETH), Litcoin ($LTC), and Bitcoin Cash ($BCH) on the platform.
These events injected a great deal of volatility into cryptocurrencies, causing $BTC to reach a yearly high above $30,000, The aggregate trading volume among popular exchanges significantly increased in June compared to May. $BCH was the top gainer in June, with a staggering 170% increase in price. $LTC also outperformed towards the end of June as its halving approaches in early Aug.
Although $BTC reached a yearly high, it's worth noting that $ETH did not follow suit and continued to trade below $2,000. This is likely due to concern about whether the SEC will deem $ETH as a security, after listing 68 altcoins as securities so far.
1. Macro Economic Outlook
Quantitative Tightening
The Federal Reserve's Quantitative Tightening program is ongoing, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Reference: FOMC June Statement.
Inflation and Interest Rates
The CPI (year-over-year) fell to 4% in May. However, the CORE CPI (month-over-month) was stubborn and remained at 0.4% for three consecutive months.
In the June FOMC meeting, the Fed paused for the first time in 2023. However, during the FOMC press conference, Jerome Powell stated that most of the committee members expected more rate hikes at the end of the year, delivering a hawkish pause. The DXY surged and $BTC plummeted as soon as the statement was made.
Inflation in European countries remained elevated, with the CPI (year-over-year) dropping to 6.1% in May. In June, the European Central Bank raised rates by 25 basis points.
Treasury General Account (TGA) Refill and Liquidity Drain
After the debt ceiling deal was reached in late May, the U.S. Treasury proceeded to fund the TGA in June. The composition of securities offerings was mostly short-term dated Treasury securities, and the majority of the demand came from money held in the Reverse Repo Program (RRP), alleviating the expected liquidity drain from the commercial sector (see Appendix A).
2. Cryptocurrency Market Commentary
2.1 Bitcoin Outperformed Gold and CFTC Commercial Traders Switched To Net Longs
In June, commercial traders on the CME trading platform for Bitcoin futures closed their short positions and shifted to net long positions towards the end of the month. This shift in sentiment could be attributed to several bullish catalysts, including news about Bitcoin adoption by traditional finance, which was reported in mid-June.
Interestingly, Bitcoin's price action has recently deviated from that of gold with gold's price action remaining sluggish. Additionally, the US Dollar Index has been in a general downtrend, which has also contributed to the rise in Bitcoin's value relative to the dollar.
2.2 Bitcoin Defended 200-Week Moving Average and Continued The Uptrend
In June, Bitcoin's price defended and showed strong support at the 200-Week Moving Average and Short-term Holder Cost Basis, resulting in a continued uptrend. This was largely due to bullish news within the industry.
Meanwhile, the circulating supply of the top 4 stablecoins continued to decline.
As of June 30, the market capitalization of Bitcoin stands at $592 billion, while the Total Value Locked (TVL) in DeFi on the Ethereum network is at $26 billion.
The Stablecoin Supply Ratio Oscillator is currently within the medium range, which does not suggest an overbought or oversold condition.
2.3 CEX Spot and Derivatives Trading Volume
The trading volume in June surpassed that of May, as the month was marked with several high-impact news and events. Notably, on June 16th, the Curve Finance Spot Volume saw a significant surge due to the fear of USDT de-peg. This prompted traders to exchange the stablecoin for other cryptocurrencies, leading to a higher-than-normal transaction volume.
Moreover, the total trading volume on both centralized and decentralized exchanges spiked during the week following the filing of Spot Bitcoin ETF by Blackrock and other traditional finance institutions, and the launch of EDX Markets. These developments injected optimism and hype in crypto markets, which contributed to the surge in trading activities.
2.4 Bitcoin Trading Traffic (UTC)
During June, the busiest trading period for Bitcoin fell within 13:30 to 18:00 (UTC), which corresponds to the close of the London Trading Session and the opening of the New York Trading Session. This period also exhibited a significant increase in price displacement, with the highest average displacement of $143.6 during 16:30 to 16:45 (UTC). This represents a window for traders to capture volatility and price movements.
In the Asia Trading Session, the most active trading period occurred between 00:15 to 01:15 (UTC).
2.5 Bitcoin Price Action Review (Price Drivers in June)
High-profile news events in June had a significant impact on the $BTC price.
The SEC suing Binance.U.S. caused sell-offs and liquidated more than $60M in long positions.
Robinhood delisting certain cryptocurrencies and Powell's announcement of additional rate hikes also triggered sell-offs.
However, Blackrock and several traditional finance institutions filing for Bitcoin Spot ETFs injected optimism and caused Bitcoin to rally, with rumours about Fidelity's filing on 23rd June resulting in a 2023 all-time high of $31,432.
The major price displacement of Bitcoin tends to occur towards the end of the London Trading Session and the opening of the New York Trading Session, when high impact news are released and traders from all around the world are most active in the market.
As of June 30, the total open interest in the market stands at approximately $18 billion. Additionally, the aggregate funding rate remains positive, indicating that the market sentiment is bullish.
2.6 Bitcoin Cash ($BCH) Top Gainer in June
On June 20th, EDX Markets, a crypto exchange backed by Citadel Securities, Fidelity Digital Assets, and Charles Schwab Corp., announced the launch of trading for Bitcoin ($BTC), Bitcoin Cash ($BCH), Ethereum ($ETH), and Litecoin ($LTC).
The launch of trading on the exchange led to an astonishing 200% price increase for Bitcoin Cash ($BCH) in just one week as $BCH gained more social interest and hype.
Additionally, it is worth noting that Litecoin's ($LTC) halving is expected to occur on August 2nd, which may have an impact on its price in the coming weeks.
However, Ethereum ($ETH) underperformed admist the SEC listing more altcoins as securities. Whether the SEC will deem $ETH as a security or not remains a point of concern for $ETH investors.
2.7 Trending Layer One and Layer Two Tokens Performance
Interestingly, in June, only Bitcoin ($BTC), Bitcoin Cash ($BCH), Litcoin ($LTC), Ethereum ($ETH) and Tron ($TRX) recorded positive price increases, while most altcoins recorded negative. This can be attributed to the SEC's lawsuit against Binance.U.S. and Coinbase for unregistered securities offerings, and listing more altcoins as securities, which created uncertainty and fear in the altcoins market.
As a result, investors moved away from altcoins and sought refuge in more established non-securities cryptocurrencies like Bitcoin and Bitcoin Cash.
2.8 Trending GameFi/Metaverse and DeFi Tokens Performance
The GameFi, Metaverse, and DeFi sectors have remained sluggish in recent times due to the SEC's lawsuit against Binance.U.S. and Coinbase, in which more altcoins were listed as securities. Among these sectors, $APE, $UNI, and $MKR have recorded the highest gains in aggregate trading volume in June.
2.9 Trending CEX Tokens and Memecoins Performance
In June, both CEX tokens and Memecoins performed below expectations. However, $PEPE, a memecoin that gained popularity after its launch in April, outperformed in June, with its price increasing by 20% since the beginning of the month.
2.10 BTCTUSD / BTCUSDT Premium-Discount
It is noteworthy that the BTCTUSD pair has been trading at a premium compared to the BTCUSDT pair on Binance.
Between June 14th and 21st, BTCTUSD traded at a discount relative to BTCUSDT, as TUSDUSDT rose above $1 due to USDT FUD on Curve.
However, after a few days, BTCTUSD quickly returned to trading at a premium.
Additionally, Binance has launched a TUSD Zero Maker Fee Promotion, which will take effect on June 30th at 00:00:000 (UTC).
3. News Highlights
SEC Files 13 Charges Against Binance Entities and Founder Changpeng Zhao.
Hong Kong legislator invites Coinbase to the region despite SEC scrutiny.
Nigeria regulator halts Binance operations.
Robinhood To Delist Cardano, Polygon, and Solana Tokens.
Louis Vuitton To Release $39,000 Physical-Backed NFTs.
Cathie Wood's ARK Buys $21.6M Coinbase Shares as SEC Suit Sends Stock Tumbling.
Binance.US now says it's only removing 10 trading pairs in wake of lawsuit.
Celsius seeks to convert alts to Bitcoin and Ether under reorganization plan.
BlackRock Close to Filing for Bitcoin ETF Application.
WisdomTree, Invesco Follow BlackRock With Spot Bitcoin ETF Applications.
Nevada regulator claims Prime Trust owes customers $85.7M in fiat alone.
TrueUSD Says TUSD Stablecoin Has ‘No Exposure’ to Embattled Prime Trust.
Bitcoin Briefly Pushes Above $31K After Fidelity Spot ETF Report.
Curve pool imbalance triggers USDT depeg concerns, Tether CTO calls it FUD.
SEC lawsuits: 68 cryptocurrencies are now seen as securities by the SEC.
4. July Volatility
July Economic Events
| Date | Economic Data | Previous |
| Friday, July 7, 2023 08:30 (GMT -4) | Nonfarm Payrolls (Jun)Unemployment Rate (Jun) | 339K3.7% |
| Wednesday, July 12, 2023 08:30 (GMT -4) | Core CPI (MoM) (Jun)CPI (YoY) (Jun)CPI (MoM) (Jun) | 0.4%4%0.1% |
| Thursday, July 13, 2023 08:30 (GMT -4) | PPI (MoM) (Jun) | -0.3% |
| Tuesday, July 18, 2023 08:30 (GMT -4) | Core Retail Sales (MoM) (Jun)Retail Sales (MoM) (Jun) | 0.1%0.3% |
| Wednesday, July 26, 2023 14:00 (GMT -4) | Fed Interest Rate Decision | 5%-5.25% |
5. Appendix
Fig A. Fed Balance Sheet, U.S. Treasury General Account (TGA), Reverse Repurchase Agreements (RRP) and Euro Central Banks Total Assets
The TGA rebuild was mainly financed by short-term treasury bills. Since the yields for short-term treasury bills are higher than those for Reverse Repo with the Fed, money from the Reverse Repo was shifted by investors to meet the demand for offered treasury bills. As we can see from the chart, the increase in TGA (approximately $450 billion) corresponded to the drawdown in RRP (approximately $300 billion).
Fig B. Liquidation Heatmap
Liquidation zones locate at
1) above market price $33,000 - $34,000;
2) below market price $22,000 - 25,000.
Source: Hyblock Capital., as of July 3, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency.
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