Bear market is still mild

As soon as prices start moving, the market looks for an explanation. The narratives that emerge are colored by price direction. In a bear market, they tend to paint a bleak picture and focus on finding something or someone to blame. In this bear market, the arrows are pointed at Michael Saylor and his company Strategy, which plays a role in both upward and downward price movements. Read more on this in today’s edition of Market News.

Market update

Next week will mark nine months since bitcoin reached the peak of the last bull market. That was October 6 with a price of €107,000. Since then, we have seen a downward trend, with lower highs and lower lows. Last week, the price dropped to €51,000, the lowest point of the current bear market.

With a decline of 52%, this bear market is still mild. In the previous two bear markets, the bottom was 75% and 83% below the peak. One possible explanation is that in recent years, a new group of investors has become active, holding bitcoin as part of a diversified portfolio and being less sensitive to the price.

But Strategy's aggressive buying has certainly also contributed to the strikingly resilient price. Since October 6, the company has taken 207,332 BTC off the market. However, Strategy is under serious pressure. MSTR shares are down 85%, while its preferred stock, STRC, is also under strain.

It is plausible that Strategy will buy little to no additional bitcoin for the time being. Could this be the catalyst bitcoin needs for the next step down? From a valuation perspective, it may not be necessary. The price is now in the range where both the 200-week moving average and the realized price lie, and this is where the bottom was formed in previous bear markets.

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Japan revamps financial infrastructure

Japan is working on a major overhaul of its financial infrastructure. This may sound like a subject for specialists, but it is often the financial system architecture that provides an indication of the market direction. After all, this is the framework in which the lion's share of the money flows.

The key point: Japan wants to prepare its old payment system for digital money. In doing so, it is explicitly looking at building blocks that have long existed in the crypto world. Think stablecoins, tokenized bank deposits, and transaction settlement outside office hours.

A central role is reserved for Zengin-Net, Japan's interbank payment system. This system has been in place for more than fifty years and forms an important base layer under Japan's payment traffic. However, this base layer is outdated. Maintenance is becoming more expensive, new functions are harder to implement, and modern payment forms fit increasingly poorly into the old design.

This is why Zengin-Net is developing a new infrastructure, expected to be ready by 2030. First, real-time payments and payments via mobile numbers will be introduced. This will be followed by payment requests, QR code payments, and links to overseas payment systems. It is important that the new infrastructure is designed to be flexible enough to support payments using both stablecoins and tokenized bank deposits.

The securities market is also experiencing significant change. The Japan Securities Clearing Corporation, which helps settle securities and derivatives transactions, wants digital collateral to be used more efficiently. It points to a well-known concept from crypto: the atomic swap. This is a transaction in which two assets are exchanged simultaneously. Think of cash out and government bonds in, without either party having to temporarily hold extra liquidity or collateral. Institutional parties that regularly have huge amounts tied up in collateral are understandably keen on this.

The broader theme is not that Japan is decentralizing its financial system. Rather, the financial industry is increasingly adopting technologies first developed in the crypto ecosystem. With every upgrade, crypto components are selected, examined, and built into the system. Step by step, two worlds that have long stood in opposition are gradually moving closer together.

In other news

1. Clarity Act faces resistance from law enforcement agencies. The main sticking point is the provision that prevents DeFi developers from being classified as money transmitters. Law enforcement agencies fear that the exception could become too broad and could make it easier for criminals to launder money, evade sanctions, and commit fraud. They have received backing from the Catholic Church, which warns that misuse of the provision could lead to an increase in fraud and human trafficking. As time runs short, and with these key disagreements not yet resolved, Galaxy Digital has lowered the odds of the market structure bill passing in 2026 to 50/50.

2. Binance closes doors to customers in parts of the EU. Customers in Poland, Italy, Spain, and France have been asked to withdraw their funds from the exchange. The company has failed to obtain its MiCA license before the deadline. From Wednesday, unlicensed companies may no longer offer services within the EU. Binance had hoped for approval from the Greek regulator, but unexpectedly withdrew its application at the last minute. Binance states that Europe remains an important market and that it is doing everything possible to serve customers there in compliance with local regulations.

3. Indonesia formalizes crypto and cracks down on promotional layer. The Indonesian parliament wants the local crypto industry to become more attractive and competitive. It aims to stimulate innovation and has granted the primary regulator powers to assist in this goal. Activities such as staking, lending, and pledging are mentioned. At the same time, authorities are tightening oversight of crypto marketing, with the behavior of finfluencers a key focus. Under the new rules, finfluencers could face criminal prosecution for misconduct.

4. American Bitcoin funds on track for worst month ever. Investors have already withdrawn $4.1 billion in June, including $3 billion from BlackRock's IBIT fund. This week marks the seventh consecutive week in the red. In total, more than $7.7 billion flowed out of funds during this period, which still collectively hold more than $72 billion in Bitcoin. The average IBIT investor is down 40% according to Bloomberg. ETF analyst Nate Geraci described it as a “brutal intro to BTC for mainstream investors.”

Satoshi Radio: The latest episode of Satoshi Radio unexpectedly revolves around just one company: Strategy. The company's Bitcoin strategy is under pressure, and both the company and its head honcho are being singled out by the market as scapegoats. This leads to a heated debate in which various viewpoints ultimately tell the same story: trading with leverage is risky, especially at a scale like Strategy's.

This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it. Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information. Investments involve risks. There is a possibility of losing your entire invested capital.