1. Interest rate cut path
The macroeconomic environment is likely to continue to play an important role in cryptocurrency prices in the second half of this year. André Dragosch, head of research at ETC Group, noted that concerns about a global economic slowdown could weigh on Bitcoin, but central banks are likely to cut interest rates, which would serve as a boost for digital assets. "In the past, you'd see that periods of increased money supply growth were associated with Bitcoin bull markets, and periods of decreased money supply growth were associated with bear markets," Dragosch said in a phone interview.
Without rate cuts, "economic growth will remain slow, limiting outside investment into speculative markets," analysts at CCData wrote in a recent report. Traders currently expect the Fed to cut rates twice by the end of the year, with the first in September, according to the CME FedWatch Tool. However, Fed officials themselves expect only one rate cut by the end of the year, according to the "dot plot" projections released by policymakers in June.
2. Mt. Gox repayment
Cryptocurrency investors will be closely watching the amount of Bitcoin sold by Mt. Gox creditors. The bankrupt digital asset exchange said it will begin paying back Bitcoin in July to creditors who lost assets in a hack of the platform more than a decade ago. The news weighed on Bitcoin, which is now trading at a much higher price than it was a dozen years ago, as investors worry that Mt. Gox creditors may choose to sell the Bitcoin they received.
Founded in 2010, Mt. Gox is one of the earlier cryptocurrency exchanges and was once the world's largest digital asset exchange. A hack in 2011 resulted in the theft of more than 600,000 bitcoins, and the platform went bankrupt in 2014. Last year, the U.S. Department of Justice charged two Russian citizens with conspiring to launder money through the hack of Mt. Gox. The exchange said last September that October 31, 2024 would be the deadline for basic repayments, early lump-sum repayments and mid-term repayments. It is worth noting that some Mt. Gox investors said earlier this year that they had received cash payments for some of the stolen assets, but repayments in Bitcoin and Bitcoin Cash will begin this month. As of Wednesday, the exchange held about 141,687 bitcoins, worth about $8.5 billion, according to Arkham Intelligence.
However, Greg Cipolaro, global head of research at NYDIG, said the actual sell-off may not have as much impact as the market expects. NYDIG expects that when the repayment occurs, about $1.5 billion worth of Bitcoin will enter the market. Cipolaro wrote in a recent report that while this is a large number, it may not have much impact on the price of Bitcoin given the daily trading volume of the token, which ranges from $1 billion to $1.5 billion for Bitcoin quoted in US dollars and $4 billion for Bitcoin quoted in USDT.
3. US presidential election
Cryptocurrency investors will be closely watching the outcome of the November U.S. presidential election and how the elected administration formulates policy around digital assets. Cryptocurrency appears to have become an increasingly important topic during this election cycle. Republican presidential candidate Donald Trump has changed his stance on cryptocurrencies, with the former president embracing the industry after slamming the asset in the past. Trump's campaign began accepting cryptocurrency donations in May, and Trump has met with executives from crypto mining companies, reportedly positioning himself as the "crypto president."
Meanwhile, in May, dozens of House Democrats voted to approve an industry-backed regulation bill, a move many saw as a sign that Democratic lawmakers don’t want the voting public to perceive their party as anti-crypto.
4. Cryptocurrency ETFs
According to multiple media reports, the U.S. Securities and Exchange Commission (SEC) may approve the first Ethereum ETF as early as mid-July. In May, the SEC approved documents submitted by the New York Stock Exchange (NYSE), Nasdaq and a subsidiary of the Chicago Board Options Exchange (Cboe) that requested rule changes to enable them to list spot Ethereum ETFs. However, the agency has not yet approved the registration statements of potential issuers.
While it is widely believed that demand for an Ethereum ETF is unlikely to be as large as that for a Bitcoin ETF, analysts expect the emergence of such a product to significantly boost the price of Ether and bring more demand to the entire cryptocurrency space.
