Bitcoin (BTC) markets bounced back this week as the rest of the digital asset market lagged behind it. Bitcoin ends the week up ~8% while the second and third largest assets on the Brave New Coin market cap table, Ethereum (ETH) and Binance Coin (BNB), both end the week down ~7%.
The price of BTC surged on Sunday after Elon Musk said on Twitter that the Tesla will begin accepting Bitcoin transactions again if and when there’s “confirmation of reasonable (~50%) clean energy usage by miners with positive future trend.”
Musk’s tweet appeared in a Twitter thread about an article in which Sygnia CEO Magda Wierzycka accused him of facilitating a Bitcoin pump and dump scheme. Wierzycka said Tesla and Musk bought $1.5 billion in BTC and then "sold a big part of his exposure at the peak." In his response tweet Musk says this was inaccurate, and added that Tesla “only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.”
Musk’s assurances that he is willing to back Bitcoin, as long as it is green, pushed the BTC price from around $34,960 at the start of Sunday to as high as $39,050 towards the end of the day. The price pick-up is evidence that the “Elon effect” continues to be a key macro price driver in crypto markets.
In recent months Musk’s bullish or bearish perspectives about crypto have triggered major market moves. In February, he announced that Tesla would be adding BTC to its treasury. This sent the price soaring by ~15% to US$44,000. In May, Musk announced that Tesla would be backing away from Bitcoin for environmental reasons. This pulled the price down by almost ~14% and below $50,00 for the first time that month.
The week also began strongly for Bitcoin markets with prices rising following positive sentiment following El Salvador’s parliament approving Bitcoin as legal tender. Citizens will be able to use Bitcoin for everything from paying taxes, to servicing debt and to purchasing goods and services. El Salvador is the first country ever to pass such a bill and the move was considered by many observers to be a rubicon moment for Bitcoin. El Salvador’s GDP is around $24 billion per annum, putting it at 104th out of 190 countries - just in front of Iceland, but behind Nepal.
Crypto news for the week ahead
The road to Ethereum’s July 14th London hard fork - which will come with a major overhaul of the network’s gas model - is well underway. This Wednesday, a version of London will launch on Goerli, a Proof-of-Authority Ethereum test network that allows for blockchain development testing. The price of Ethereum is down ~6% in the last week.
Kusama (KSM) is the Polkadot blockchain’s canary network, a testnet with actual money involved. After Shell, the first Kusama parachain went live a few weeks ago, Parachain Slot Auctions will be a market-efficient way of selecting which other parachains will be added to the Kusama Relay-chain and have their functionality become a part of the Kusama network. The price of KSM is up ~8% in the last week.
Top 10 Crypto Summary
It was a bearish week for the majority of large-cap assets on the Brave New Coin market cap table. ETH fell by ~6% as Ethereum transaction fees hit their lowest levels in nearly six months. Average transaction fees were around US$4 last week after being US$70 in May. The key driver of the fee drop has been the emergence of sidechain solutions like Polygon that has made trading significantly cheaper on major DeFi platforms like Sushiswap, Curve, and 1inch.
Bitcoin Price Chart
The Bitcoin price of (BTC) broke past the key psychological price levels of $35,000 and $37,500 in the last week. Another positive fundamental flag for Bitcoin has been the growing usage of its layer-2 Lightning Network. The Lightning Network’s capacity just broke 1,500 BTC and network nodes, channels, and capacity just hit all-time highs. Coincidentally, the two most popular Finance apps in El Salvador are Lightning-enabled Bitcoin wallets.