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My name is Yasuo Matsuda, a senior analyst at Rakuten Wallet Co., Ltd. This time, I will be looking back on the cryptocurrency market and explaining future trends, so please stay tuned.
The BTC market in August is easy to understand when viewed in dollars. After hitting $70,000 at the end of July, it plummeted below $50,000 in early August. It then rebounded and has been fluctuating around $60,000.
The factors behind this drop of over $20,000 can be divided into three main phases. First, the first phase, the drop from $70,000 to $65,000, is believed to be largely due to Harris's catch-up in the US presidential election. At the Bitcoin Conference on July 27, Trump proposed the dismissal of Chairman Gensler, who is hostile to cryptocurrencies, and the US government's holding of Bitcoin as a reserve asset, and Bitcoin touched $70,000 in one go.
However, as Harris, who took over from President Biden, who was at a disadvantage, steadily closed the gap with Trump, Bitcoin's value gradually fell due to the unwinding of positions that had accumulated in the "almost tiger" phase.
The second phase, the drop from $65,000 to $61,000, was mainly due to concerns about the worsening US economy. The ISM manufacturing business confidence index and employment statistics worsened. Until now, the market has responded with risk-on when an interest rate cut was imminent to an economic recession indicator, but concerns about the economic downturn led to risk-off and Bitcoin was sold.
The sharp drop from $61,000 to $49,000 in the third phase was due to the appreciation of the yen and the collapse of Japanese stocks. At the end of July, the Bank of Japan raised interest rates, and Governor Ueda hinted at further rate hikes. This led to a flood of unwinding of yen carry trades, and Japanese stocks plummeted due to concerns about worsening corporate earnings. On August 5, the dollar/yen fell by 5 yen in one day. The Nikkei average recorded the second-largest drop in history after Black Monday.
The surprised authorities held a three-way meeting between the Ministry of Finance, the Bank of Japan, and the Financial Services Agency. When Deputy Governor Uchida of the Bank of Japan stated that interest rates would not be raised while the market was in turmoil, the dollar/yen rebounded and Japanese stocks also recovered their value. Bitcoin also rebounded to the $62,000 range, fully recovering the decline from the third phase. Concerns about the worsening US economy have also receded. The ISM non-manufacturing business confidence index and retail sales have shown signs of improving, and the second phase of recovery is currently underway.
However, Harris' momentum is unstoppable, and she is currently overtaking Trump in opinion polls. If Trump is elected, there are rumors that a dream team for the cryptocurrency industry will be formed, with Elon Musk and Robert Kennedy Jr. joining the administration, while if Harris is elected, it has been reported that SEC Chairman Gensler will be appointed Secretary of the Treasury. Harris has not revealed her policy on cryptocurrencies, but the view that Bitcoin will be sold if Harris is in the lead is spreading.
Thus, concerns over the strong yen and falling Japanese stock prices have subsided, and concerns over excessive US economic deterioration have subsided, and the market is beginning to show signs of stability, but the outcome of the presidential election is unclear, weighing on the market. As the showdown in November approaches, the outcome of the presidential election is likely to become the focus of the Bitcoin market, with a structure of "buy for Trump, sell for Harris."
Even after the first TV debate in September, there does not seem to be a big difference in the approval ratings of the two candidates. If the second TV debate is held in October and Trump is able to make a difference there, it is possible that the "almost tiger" trade will reach $70,000 and even a new all-time high.
◉Yasuo Matsuda
Senior Analyst, Rakuten Wallet Co., Ltd.
Majored in international monetary systems at the Faculty of Economics, University of Tokyo. Engaged in sales and trading of foreign exchange and bonds at Mitsubishi UFJ Bank and Deutsche Bank Group. Since 2018, engaged in analyzing and forecasting the cryptocurrency market at a cryptocurrency exchange, predicting a peak of 8 million yen in 2021 and 5 million yen at the end of the year, which was almost accurate. Has been in current position since January 2022.
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