While much of the world was watching the global political drama in the UK, France and the U.S., the crypto markets moved lower as news of broad based selling intensified, with the total market cap of crypto down over 10% on the week.

Bitcoin presumably led the market lower as Germany has sold almost half its impounded Bitcoin and Mt Gox started wallet transfers. The selloff hit below $54k on the 5th and has come close to that level last night and again this morning. All three times, it has bounced to $56k, prompting many technical analysts to declare we are near a bottom.

Apart from Bitcoin, there was mixed Ethereum news from Golem, Van Eck and Greyscale as the token continues to flirt with the $3000 level.

Arguably the most important story, however, just happened today, with the release of the 2024 official Republican party platform. In a first for a major political party, crypto is not only featured, but the Republicans have vowed to protect "the right to… transact free from Government Surveillance and Control”.

Weekly Crypto Watch

• Bitcoin (BTC) $56,418 (down 10.64%)

• Ether (ETH) $3009 (down 13.31%)

• Solana (SOL) $140.04 (down 5.45%)

• BTC Funding Rate 0.0042%

• ETH Funding Rate 0.0062

Macro Watch

• S&P 5572.85 (up 98.21)

• Gold $2,366.4 (up $26.2)

• Oil $82.22 (up $1.28 )

• DXY 105.02 (down of 0.81 points)

In The News

Political Chaos Reigns as Ruling Parties are Voted Out in the U.K and France, while the U.S. Campaign Theater Continues.

In the news this past week, there were elections in the UK and France where the ruling party lost. In the UK, Labor won a resounding victory with a dominant number of parliamentary seats, although it is worth pointing out they received less than 40% of the vote. It is unclear, as of now, whether the UK policy on crypto will be impacted, as the new government has not yet articulated a position beyond support for tokenization and a digital pound. In France, the election resulted in a hung parliament where no party has sufficient control to form a government as of yet. The previous centrist ruling party, however, is in a minority position compared to its erstwhile allies on the left. President Macron has asked the previous PM to remain, however, until there is some clarity on the new government, but that could change at any time.

In the U.S., meanwhile, calls are reaching a fever pitch for Biden to step aside in his quest for re-election, but the White House remains defiant. Media outlets that were staunch defenders of the President have written editorials calling for him to step aside and several Democrats have also done so. At the same time, the White House wrote a letter to senior Congressional Leaders stating that Biden will stay in the race amidst reports that Hunter and Jill Biden are leading that charge. This story will not end until Biden is officially nominated or drops out, but it does make for a less certain environment.

It needs to be said, however, that markets generally react poorly to uncertainty. As a result, the lack of clarity in the UK, in Europe and especially the U.S. is generally negative, particularly for crypto, which is seen as more sensitive to potential regulatory changes.

Ethereum Good News and Bad News

First, the bad news. A 2017 ICO called Golem, transferred $100 million in Ethereum from its wallets to exchanges, which is generally seen as an intention to sell. Golem was one of the first ICOs, so there is some speculation that there could be more supply coming to the market.

The good news is the likelihood of a spot Ethereum ETF continues to increase with Van Eck amending their filings and Franklin Templeton, who has also filed, has created a compelling investor narrative. As proof of the likelihood, the ETHE trust, run by Greyscale moved to a premium last week. This had traded, before the initial approvals by the SEC, at a discount of roughly 25% and over 50% last year.

The Ethereum to Bitcoin ratio continues to trade around the middle of its recent range, however, indicating that the assets are still highly correlated. It is worth noting that the ratio, which now stands at 0.053 had dipped below 0.048 before the initial SEC approval news and spiked to 0.06 when the news was first released.

Republican Platform is Officially Pro Crypto

While it had been signalled for some time, the Republican release of their platform specifically endorses several policies important to the crypto industry. The platform says:

“Republicans will end Democrats’ unlawful and un-American crypto crackdown and oppose the creation of a central-bank digital currency... We will defend the right to mine bitcoin, and ensure every American has the right to self-custody of their digital assets, and transact free from government surveillance and control.”

This is a stark contrast with the current Administration's policy of regulation by enforcement and the desires of the Warren led faction to eliminate self custody and promote a Central Bank Digital Currency. While there have been many Democratic donors calling for them to change their positions, the Republicans have put a stake in the ground. It remains to be seen if a new candidate emerges instead of Biden or if that person pivots on crypto, however. As the summer rolls on, perhaps we will get some clarity.