One week after the 805 crisis, BlackRock helps BTC return to above $60,000.

Author: Sunny Shi, Messari Corporate Research Analyst

Last weekend, due to concerns about a massive withdrawal of 1 trillion US dollars in yen Arbitrage trades, BTC briefly fell below $50,000 for the first time since February. On Thursday, less than a week after the crisis, BTC returned to above $60,000.

Although BTC is a cornerstone asset of Cryptocurrency, its volatility is still much higher than that of stock indices. We can attribute BTC's high beta reflexivity to:

• Due to futures trading, the leverage penetration of Cryptocurrency is too high. During the fall below $50,000, the liquidation amount of Cryptocurrency traders exceeded $1 billion. On Thursday, when it rose to $62,000, nearly $100 million of BTC shorts were liquidated.
• BTC lacks cash flow. Long-term stock managers usually trade on P/E ratio or free cash flow, which allows them to confidently "Buy the Dips". If macro-driven fund flows do not affect its company's profit potential, fundamental investors have no reason for dumping. In contrast, BTC's valuation is not based on anything.
• The institutional foundation of Cryptocurrency is weak. On August 5th, retail investors were mainly net sellers of stocks, while institutions were buyers. In general, institutions holding existing capital are unlikely to be dumping due to risk and panic. In more mature markets, diversification of investment horizons helps stabilize the market.

The situation with BTC may be starting to change. It is worth noting that BlackRock's BTC ETF IBIT has only experienced one day of outflows.

BlackRock contributed over $200 million in net inflows to BTC ETFs last week. This does not mean BlackRock will never start dumping, but for now, the asset management firm is choosing to accumulate BTC.

• This trend may indicate that, unlike retail investors, BlackRock has a longer-term perspective on its operations.

These developments have largely supported the encryption asset class, and the continuous rise of BTC held by ETFs may be exactly what we need to break free from the endless cycle of boom and bust. The 'baby boomer' generation may ultimately save us.