Have the record summer temperatures fried investors’ brains? On August 11, BlackRock, whose chief executive described bitcoin in 2017 as an index for money laundering, launched a private trust for US institutions to invest in it.
BlackRock cited substantial interest from institutional clients despite the recent steep falls. From a peak in November 2021 of $2.96 trillion, the market capitalization of all cryptos fell 72% to just $836 billion in June 2022, as rising rates brought down all markets. The Nasdaq fell 32% over the same period.
As investors somehow convinced themselves that the Fed has got on top of inflation (it hasn’t) and will soon start cutting rates (it won’t), cryptos rallied.
Price moves in crypto reflect a speculative bet on whether or not it will one day have a core place within the financial system
By mid-August, the overall market was down just 60% from its all-time high, while the Nasdaq was back to just 19% down. Bitcoin, which hit $68,000 in November and fell to $19,000 in July, recovered to $24,000 in mid-August.
This recovery came while almost every day a new hack emptied holders’ wallets on a bridge from one network to another, a crypto exchange stopped trading and froze customer withdrawals, and the crypto winter spread.
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