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Good morning everyone,

These two news stories caught my eye this week:

1. A few weeks ago I wrote about why Australia is on the verge of becoming a cashless society as the country's last remaining cash transport company, Armaguard, has been struggling to stay afloat. This week, Armaguard's eight biggest customers announced that they would inject up to AUD50 million into the troubled cash transport company to keep it afloat for the next 12 months. The deal removes the risk of the nation's sole distributor of notes and coins failing for at least a year, giving the industry time to find a more sustainable way of moving money around the country. Tldr: Australia is still on the verge of becoming a cashless society.

2. In Australia, inflation rose from 3.6 percent in April to 4 percent in May. The higher-than-expected inflation number has dramatically increased the risk that the Reserve Bank will be forced to raise interest rates again to get inflation under control. Tldr: While Switzerland, Canada, and the EU have started to ease monetary policy in 2024, cutting interest rates for the first time in three years, Australia is still battling inflation and the tightening cycle may not be over yet.

DISCLAIMER: This newsletter is not financial advice. It does not take into account your financial situation, is general in nature, and is for educational purposes only.

Also, this newsletter contains affiliate links. This means that I may receive a commission from them. But for Crypto Down Under, I only choose products I use myself and can recommend wholeheartedly. Don’t forget to do your own research.

Bitcoin drops below USD60,000

For the main story of the week, let's look at the price of Bitcoin.

This week has been ugly as Bitcoin even fell below the USD60,000 mark. Ouch.

As of Thursday afternoon, Bitcoin is down about 17 percent from its all-time high in March.

Why is Bitcoin tanking?

There is a lot of fear in the market as several entities have started selling Bitcoin or are about to dump Bitcoin on the market.

1. As blockchain analytics firm Arkham has noted, German authorities recently began selling off parts of a large Bitcoin stockpile. The stockpile, valued at around USD3 billion, was seized from Movie2k.to, a film piracy website that was shut down in 2020. As of Thursday afternoon, the stockpile has been reduced to USD2.75 billion, meaning that the authorities have sold USD250 million worth of Bitcoin in the last few days, while more has been moved to exchanges where it is likely to be sold.

2. As Arkham also noted, the US government has moved around USD240 million worth of seized Bitcoin to a Coinbase address, sparking concerns that the digital assets are likely to be sold. The last confirmed sale by the government was in March 2023, when it unloaded USD216 million worth of seized Bitcoin. As of Thursday afternoon, the US government is still sitting on a crypto stockpile worth USD13.4 billion. 97 percent of that is Bitcoin.

3. On Monday, the price of Bitcoin fell on news that defunct Bitcoin exchange Mt. Gox would begin distributing assets stolen from customers in a 2014 hack in July. Mt. Gox was once the world's leading crypto exchange, handling more than 70 percent of all Bitcoin transactions in its early years. In 2014, hackers attacked the exchange, resulting in the loss of an estimated 740,000 Bitcoins (USD15 billion at current prices). The hack was the largest of many attacks on the exchange in 2010-13. The repayments this July are widely seen as adding selling pressure to the market, as early investors will receive assets at a much higher value than their pre-2014 entries, making them inclined to sell at least some of their holdings.

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Volatility is expected

As you have seen above, there is a lot of selling pressure in the market as several entities have started to sell Bitcoin or are about to sell or repay Bitcoin.

But while this may feel scary, it is completely expected.

During the 2015-2017 bull market, there were more than 13 pullbacks of more than 20 percent. So don't let a 17 percent drawdown get to you.

In case you have forgotten, you are here because Bitcoin is volatile. And volatility works both ways, up and down.

So just sit tight and enjoy the ride. You can even use these pullbacks to your advantage and buy the dips.

We're still in a bull market

If you are rattled, zoom out. The fundamentals are stronger than ever, and several bullish catalysts are already in motion.

Consider that crypto ETFs are leading to greater acceptance among older investor cohorts, the monetary tightening cycle has come to an end (except in Australia) and the regulatory landscape is improving.

If that's not bullish, what is?

Have a great weekend everyone!

Want to store your bitcoin yourself in a cold wallet? Use the link below to purchase a Ledger Nano S Plus wallet.

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