Latest inflation reading will give indication on how effective the Fed's deflationary measures have been — and whether they will need to ramp up
Bitcoin had a strong end to last week, rising over 10% to $22k, before reversing momentum to arrive at $19.7k — roughly flat week-on-week. The Nasdaq-100 is up just under 4% over the same period. Tomorrow all eyes will be on the US Bureau of Labor Statistics as June's CPI inflation figures are released; the value is expected to mark a fresh 40-year high of 8.8%. The latest inflation reading will give indication on how effective the Fed's deflationary measures have been — and whether they will need to ramp up to bring inflation under control.
One of the main discussion points in crypto investment last year was the launch of the US's first bitcoin futures ETFs. ETF-fever culminated in October as the Securities and Exchange Commission (SEC) approved the ProShares Bitcoin Strategy ETF to commence trading on the NYSE, and many commentators speculated that a spot bitcoin ETF would soon follow — Grayscale's Bitcoin Trust the leading candidate. But fast-forward 9 months and the SEC continues to delay or reject every application so far. On Wednesday last week the SEC rejected Grayscale's latest application — prompting the applicant launching legal action against the regulator — and commentators are increasingly critical of SEC head Gary Gensler's approach. The Wall Street Journal Editorial Board wrote a scathing assessment last week.
The Bitcoin Network has slowed slightly since last week, the 14-day moving average network hashrate has decreased 2% week-on-week to 208 EH/s. Difficulty was adjusted down 1.4% to 29.1T last week as the miners continue to come to terms with the new climate, and the early signs are for another downwards adjustment next week. Difficulty decreases are helping hash price cling onto the $0.09 level, though this still represents significantly depressed mining revenues.
The mining hardware market is experiencing turbulence at the moment. Liquidations and cancellations of orders have led to a deluge of available new-generation bitcoin mining units and those able to pick up the slack can benefit from significant discounts. Market dislocations represent serious profit potential and the opportunity has attracted some big players: Goldman Sachs is raising up to $2bn to help broker deals for distressed bitcoin mining assets. Lake Parime is exploring our own avenues for participation — stay tuned.