Weekly Update: 3rd of July

What happened between June 26 and July 3?

• After sliding to $58,000, its lowest level in 21 months, bitcoin rebounded above $60,000 this week after the Federal Reserve softened its stance on inflation. Read more
• The hard MiCA deadline of July 1 reshaped the European market: exchanges delisted USDT and players such as Binance and MEXC left, while Dutch platform Knaken faces bankruptcy. Read more
• A consortium of 140 partners launched Open USD, a stablecoin that shares its yield with users. Shares of USDC issuer Circle fell around 17% in response. Read more
• The U.S. Clarity Act is unlikely to meet the White House’s target of July 4, as the Senate first turns to other legislation. Read more

Market rebounds from its $58,000 low

Bitcoin slid to around $58,000 late in June, its lowest level in 21 months. The decline followed record outflows of more than $4 billion from spot bitcoin ETFs during the month and a tougher stance from the U.S. central bank. Fed Chair Kevin Warsh had left rates unchanged in June and removed the rate cut previously expected for this year.

This week the tide turned. Warsh signalled that inflation risks had eased, and bitcoin bounced back above $60,000. The broader market rallied too: ether gained almost 10% on the week and solana about 19%. Investors remain cautious nonetheless, as outflows from exchange-traded products continued into the first days of July.

MiCA shakes up the European market

On July 1 the transition period for the EU’s MiCA rules came to a definitive end, with major consequences for the market. Because Tether holds no authorization as an e-money token issuer, regulated exchanges such as Coinbase, Kraken and Crypto.com delisted USDT trading for European clients. Binance withdrew its license application in Greece and stopped serving EU users on July 1, while MEXC also scaled back its services in Europe.

In the Netherlands, crypto platform Knaken ran into serious trouble. The Public Prosecution Service asked the Rotterdam court on June 30 to declare the company bankrupt, after it failed to obtain an AFM license and had halted payouts to customers. An estimated 30,000 customers are affected, and the FIOD is investigating possible criminal offences. The shake-out shows how deeply MiCA is reshaping the European landscape.

Open USD launches as Circle shares correct

A consortium called Open Standard launched the stablecoin Open USD on June 30. More than 140 businesses stand behind the initiative, including Stripe, Coinbase, Mastercard, Visa and BlackRock. Shares of Circle, the issuer of rival USDC, lost about 17% in a single day as a result.

The unease stems from Open USD’s business model. Where Circle earns nearly all of its income from interest on the government bonds backing USDC, Open USD instead passes that yield to the partners that use the coin. Analysts were divided: some called the sell-off overdone while Open USD still has to prove itself, and price targets varied widely.

Clarity Act likely to miss its deadline

The U.S. Clarity Act, which aims to set clear rules for trading in digital assets, is unlikely to meet the White House’s preferred deadline of July 4. The Senate Banking Committee already advanced the bill in May, but a vote on the Senate floor is still pending.

Senate Majority Leader John Thune wants to take up the defense budget first when lawmakers return from recess, which could push the vote to late July or early August. Senators also still need to agree on ethics rules and anti-money-laundering measures, and on merging two different versions of the bill.

In other digital assets news

• Strategy’s shares showed first signs of recovery after a steep correction: MSTR climbed around 13% on Monday after the company announced buyback programs and a higher dividend on its STRC preferred stock.
• Metaplanet bought another $170 million of bitcoin and now holds 43,000 bitcoin, making the Japanese firm the world’s third-largest publicly traded bitcoin holder.
• Tokenization platform Securitize made its stock market debut on the New York Stock Exchange on July 2 under the ticker SECZ, via a SPAC merger. The firm manages over $4 billion in tokenized assets.