Bull market faces geopolitical headwinds
The outlines of a new bull market are becoming increasingly clear. Bitcoin continues to gain ground, even as external conditions remain far from favorable. Can the market hold its ground if headwinds intensify further? In a recent report, BlackRock explores one of the narratives that could gain momentum in a bull market: the synergy between crypto and AI. We take a closer look at this in this edition of Market News.
Market update
Last week, Bitcoin closed above its dominant 50-week average for the first time since November. This week brings another milestone. The weekly close of €74,200 was well above the May 6 high of €70,200. For many investors, this signals a shift to a new market regime. They now see the market as being in the early stages of a bull market.
A cyclical bull market is a period marked by an upward trend on the weekly chart. It is characterized by a series of higher highs (HH) and higher lows (HL), and a price above the dominant average.
In the past two weeks, we have checked two of the three boxes. After a series of lower highs (LH) and lower lows (LL), we have now seen a higher high for the first time, and the price has also closed above the average. The final step is a higher low above July 1's €50,500.
During the transition from a bear market to a bull market, sentiment remains fragile, with optimism and disbelief alternating. A continued rise would benefit investor confidence. The biggest headwind now comes from developments in the Middle East, which are pushing up oil prices, inflation, and interest rates.
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BlackRock: AI and crypto can strengthen each other
Imagine this. You ask your AI assistant to plan a long weekend in Paris. You want to fly, stay in a convenient location in the city, and see as much of the city as possible during a short stay.
For you, that's a simple goal. But behind the scenes, your agent has to carry out dozens of tasks, including looking up flights, comparing hotel prices, finding the right public transport tickets, listing must-see attractions, and ultimately making reservations and booking tickets.
The question is: how does the AI agent pay for these purchases?
BlackRock believes AI and crypto could complement each other in this area. In a recent report, the asset manager describes an economy where AI agents autonomously purchase services. For a hotel room or flight ticket, they could simply use existing payment methods.
But for payments of a few cents, this becomes cumbersome. Your agent might need to pay a fraction of a cent to search a hotel database or consult a specialized model to plan routes between attractions. BlackRock believes stablecoins are particularly well suited to this, describing them as “machine-native money.”
Some of the payment protocols needed to make this possible are already up and running. With x402, an agent can pay directly for an online service. The server requests payment, the agent pays, and access is granted. In the past thirty days, x402 processed over 75 million transactions, totaling around $24 million.
BlackRock also highlights a second development: computing power itself is becoming a tradable commodity for AI agents. Companies needing large amounts of GPU capacity are exposed to price risk. Just as an airline can hedge against rising fuel prices, an AI company will soon need a way to lock in the price of computing power.
New markets are therefore emerging on both sides of the AI equation: on one side are agents that autonomously pay for services, and on the other is the scarce resource that all this software runs on.
It is far from certain whether stablecoins will become the standard for machine payments, and the market for computing power is still small. In short, there are plenty of caveats to BlackRock's ideas about crypto and AI. But the fact that BlackRock is connecting these two worlds is significant in itself, including for the next bull market.
Because when the market picks up, narratives suddenly gain meaning. Bitcoin has clearly positioned itself as digital gold and a hedge against inflation. For the broader crypto market, BlackRock's vision of agentic commerce could become a powerful narrative.
In other news
European central banks want to relax a controversial MiCA rule for stablecoins. Issuers must currently hold thirty to sixty percent of their reserves in bank deposits. According to the European System of Central Banks (ESCB), this poses a risk to banks because the relatively volatile stablecoin deposits could replace the more predictable consumer funds. The ESCB wants stablecoin issuers to be allowed to hold their reserves in short-term bonds instead. Interestingly, Tether has previously warned of the same issue.
US regulators moving ahead now that the Clarity Act has stalled. “It’s go time,” said CFTC Chairman Michael Selig during CNBC’s Squawk on the Street. He was referring to the use of his statutory authority, which gives the agency power to modernize crypto market rules for itself. The focus will initially be on the US market structure, the use of on-chain assets as collateral, and crypto derivatives. Selig calls crypto the “future of finance” and does not intend to wait for Congress to establish a framework for its growth.
Hackers steal $387 million from crypto exchange Bitget. On Thursday, Bitget disclosed the hack, in which over 100 million XRP and more than 30,000 ETH were stolen. Bitget states that it can compensate all its customers from its own protection fund. It was the largest of five hacks in a single week. Cosmos, Payy, Duelbits, and Magic Eden were also hacked. In the latter case, white-hat hackers managed to move over 23,000 NFTs out of the attackers' reach.
Ethereum set to become a “cryptographic world computer.” That's how Vitalik Buterin describes his vision for the network he launched more than ten years ago. The network is looking increasingly unlike a traditional blockchain. New technologies allow some of the necessary verification and computation to take place off-blockchain. Hegota, a major upgrade scheduled for next year, will focus on privacy and quantum security. Further upgrades are then expected to make Ethereum “unrecognizably powerful.”
Satoshi Radio: Has bitcoin entered a new bull market? You'll find the answer in the latest episode of Satoshi Radio. Also covered: regulators taking decisive action, the Knaken case, and a new report on institutional investors.
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.