Monthly Market Roundup: June 2024
This article is originally published on the Etherscan blog.
Disclaimer: Author holds ETH, SOL, TIA & PYTH and may have intra-day/week positions and/or airdrop allocations in other coins mentioned in the article. Views and opinions are that of the author alone and do not represent the views or opinions of Etherscan. None of this is financial advice. Always do your own research before aping.
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Summer Selling in Full Swing
A bearish June across the board after promising bounces for majors in May. Gloomy themes including governments and miners selling Bitcoin, sustained Spot ETF outflows, airdrop farming fatigue and intraday celebrity rugs has morale and sentiment in the pits. Regardless, builders keep building and chains keep producing blocks. In this months edition, we highlight catalysts and potential bull and bear narratives for the second half of the year, with a dedicated view on each of the Big 3.
Bitcoin
Bitcoin closed June down 7% as an Inside Bar, exhibiting continued compression in the range formed during the first half of March. Despite a strong showing during the first trading week of June, supported by Spot ETF net inflows of $1.83 billion (which represented more than 90% of net inflows for the whole of May), price once again rejected from Current Cycle Monthly Close Highs ~$71.3k before retracing 18.8% and eventually finding support around May Open near $60k. ETF net outflows during this downtrend amounted to $1.16 billion, resulting in a net monthly inflow of just $666.5 million — making it the second worst month since inception behind April’s net outflows of $345 million.
That being said, bulls finished the month strong with a 3% Sunday pump, so far carrying that momentum into July’s Open. June’s Open at ~$67.4 remains the immediate high timeframe resistance above, while $60k provides support from below. 1D RSI remains a sliver below 50, a level bulls would like to see crossed to confirm bullish momentum.
Major potential headwinds to consider moving forward include:
- Mt. Gox distributions of Bitcoin payments starting in July.
- US Government continued selling of its 214,000 (~$14 Billion) Bitcoin seized from various criminal operations such as Silk Road and the Bitfinex Hack.
- German Government continuing the gradual selling of its 50,000 BTC (~$3 Billion) reserves seized from piracy website Movie2k.
- Bitcoin Miners selling off reserves to compensate for post-halving drops in revenue.
It’s not all doom and gloom however, there are also plenty of tailwinds including:
- Expectation of rate cuts by the US Federal Reserve and European Central Bank throughout 2024–2025, leading to the weakening of demand for their respective fiat currencies and increased demand for risk assets.
- Increasing global liquidity and its positive correlation with Bitcoin price.
- Expectation of Donald Trump winning the US Presidential election and his positive stance toward the industry.
- Bullish July seasonality, with BTC closing the month green every year since inception when June closed red.
Post-halving emission reductions creating a supply crunch and post-halving seasonality showing the continuation of uptrends for 12–18 months following a 0–2 month consolidation period from the day of halving.
Ethereum
Ether slightly underperformed Bitcoin, closing the month down 8.7% — also as an Inside Bar showing compression in a range. Despite losing the EQ ($3,417) of the move off the lows from the surprise ETF 19–4b approvals in the last week of June, the level was reclaimed on the last day of the month, with upward momentum carrying into July so far.
As with Bitcoin, the June Open ~$3,760 represents the immediate high timeframe resistance above, while June lows in the mid $3.2k’s and May’s Open ~$3k act as key supports below. Likewise, 1D RSI is just shy of 50 — a level to watch for indications of sustained upward momentum.
While ETH price shares macro headwinds and tailwinds with Bitcoin due to their general high timeframe directional correlations, there are major considerations for Ethereum and its ecosystem specifically.
On the bullish front, relevant arguments include:
- Expectation for Spot ETF s-1 approvals as early as July 4th-8th, according to Reuters and the Bloomberg ETF bros. These are supported by comments from SEC Chairman Gensler that the process is going “smoothly” and approvals will come “over the course of this summer”.
- Lido-linked Eigenlayer competitor Symbiotic Finance providing an additional supply sink, with its initial $200m cap reached within 24 hours of launch.
- Financial stimuli from ZKSync, LayerZero and Blast airdrops in June.
- Igloo Inc., parent company of PudgyPenguins acquisition of Frame with the aim of building “the world’s biggest onchain community”.
On the bearish side:
- Potential lack of demand for ETH ETF products from traditional financial institutions, resulting in lower than expected inflows.
- Potentially limited demand from crypto-native capital dues to the absence of staking yield.
- Sell-pressure from the Grayscale Ethereum Trust to the new ETF’s due to “their higher liquidity, narrower spreads and lower fees”, as well as entities exiting the carry trade from deep discount (up to 50%) entries over the past year.
- Latest SEC lawsuits against Consensys, Lido and Rocket Pool alleging staking services are securities.
- Continued fragmentation of capital through the launch of additional L2’s which are increasingly seen as redundant as well as farming fatigue from high FDV, low-float launches followed by down-only price action spurred by airdrops farmers selling to recuperate capital and large unlocks from private round investors and teams.
Solana
SOL underperformed both BTC and ETH in June, closing 11.8% down. However, it bounced significantly stronger off the lows (+20.2%), compared to BTC (7.3%) and ETH (6.3%). SOL is also the only one of these three majors for which 1D RSI has crossed the 50 level, indicating stronger bullish momentum.
The EQ of May’s range ~$154 and June Open ~$165.5 act as the immediate high timeframe resistances above, while May’s Open to Lows range between $120–126 provide support below.
Price action aside, Solana has some of the more interesting ecosystem-specific tailwind narratives of the large caps:
- Vaneck and 21Shares file applications for Solana ETFs in the US.
- Introduction of ZK compression on Layer 1, leading to order of magnitude scale improvements.
- Actions and Blinks by Dialect enabling users to interact with Solana protocols directly through third party platforms such as X. For example, buying an token or NFT.
- Solana Accelerator Colosseum raises $60 million to fund early stage projects.
- Liquid Staking trending up, catalyzed by Sanctum which will soon provide their own liquidity injection to the ecosystem through the $CLOUD airdrop. This airdrop is particularly positive because of their unique distribution design which rewards both capital and earnest contributions equally, limiting the rewarding of mercenary farmers while at the same time not punishing them excessively.
- Restaking protocol Solayer’s initiation of the first claims period concurrently with the launch of deposit Epoch 3, during which withdrawals will also be enabled. The project also announced a builders funding round involving key ecosystem figures including the founders of Solana Labs, Marinade Finance, Bonk and Drift. The Solana Restaking arc is about where Ethereum’s arc was at the end of last year, which spawned multi-billion (in terms of both TVL and market cap) protocols including Eigenlayer and Etherfi, Renzo, suggesting significant growth potential in the sector.
However, there are counterarguments which may temper expectations:
- Significant doubts expressed by crypto-natives and Bloomberg ETF specialists that Solana ETFs get approved without a change in administration of the White House and SEC as the latter has previously stated they believe SOL is a security. Even given a potential change in administration, this would only materialize in 2025.
- According to Kyle Samani of leading Solana Ecosystem VC Multicoin Capital, restaking does not solve a problem and instead creates unnecessary social coordination complexities.
- Strong signs of froth in the Memecoin sphere from alleged Celebcoin pump-and-dumps. Too many to name, but ZachXBT’s feed with replies is a good reference point. Another tangential but relevant reference point is the discussion between Ansem and Cobie regarding how celebs should engage the industry if their intentions are earnest, and in turn how we should receive them.
- Doubts expressed by Vitalik regarding the estimated scaling capacity of ZK compression.
Honorable Mention: TON
Outside the big 3, The Open Network (TON) is perhaps the most interesting protocol to keep in view. The layer 1 originally designed by Telegram closed its 4th consecutive month up against BTC, and has carried that momentum into July for a 220% gain on the ratio from the March Open bottom. Along with the rise in popularity of “tap-to-earn” Telegram mini-apps such as Notcoin and Hamster Kombat, its not too far-fetched that the network “has the capacity to introduce crypto to the masses” — as suggested by Dan Morehead of Pantera. Pantera backs this view making TON its largest investment ever.
Meanwhile, Blockworks Research takes a more cautious view, stating that Telegram’s distribution is overestimated and that the network faces challenges in onboarding developers due to its lack of EVM compatibility and unpopular programming language FunC.
To find out for yourself, this thread by Minty is a great reference point to begin exploring onchain.
Closing Thoughts
The period of market chopsolidation continues while builders keep building. The name of the game is to protect capital or at least survive until we return to easy mode. There will of course always be opportunities and outliers, but they have been few and far between. Until then, use your time to recharge mentally, one day your candles again shall be green.
