Edition 7
Top Institutional Stories
1. Spot Ethereum ETFs Performance in First Week Since Launch
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Spot Ethereum ETFs recently saw a positive turnaround, with a notable $34 million inflow on July 30, marking a significant shift after initial outflows following the July 23rd launch. The ETFs collectively attracted $106.6 million in net inflows on their first day, despite a substantial outflow of $485 million from Grayscale's Ethereum Trust, which converted to a spot ETF. Leading the inflow figures, BlackRock's iShares Ethereum Trust ETF received $266.5 million, followed by Bitwise's Ethereum ETF with $204 million, and Fidelity's Ethereum Fund ETF with $71.3 million. The total trading volume for these ETFs reached $1.08 billion, representing 23% of the volume that Bitcoin ETFs experienced during their debut.
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Why it Matters:?
The initial outflows across ETH ETFs were primarily due to Grayscale’s Ethereum Trust (ETHE) seeing significant redemptions, which has been a notable point of concern. However, the turnaround in flows suggests that other investors, possibly institutions, are stepping in to take advantage of the lower prices and increased liquidity. This rebound in inflows could potentially drive up the price of Ether, as increased demand from these structured investment products adds upward pressure on the asset's value.?
2. US Treasury Unveils Plan to Buy 1 Million Bitcoin
Senator Cynthia Lummis of Wyoming plans to introduce a bill directing the U.S. Treasury to purchase 1 million bitcoins over five years, valued at approximately $68 billion at current prices. This move aims to counter the effects of dollar debasement and leverage bitcoin as a store of value, with Lummis citing bitcoin's annual increase of about 55% over the last four years compared to the declining value of the U.S. dollar. The bill proposes that the government hold these bitcoins for at least 20 years, potentially using them to reduce national debt. Lummis also suggests that the U.S. Treasury should also take custody of the estimated 210,000 BTC currently held by the Department of Justice and other agencies, acquired through criminal seizures.
Why it Matters:?
Senator Lummis, an early adopter of bitcoin and a prominent advocate for cryptocurrency legislation, has spoken extensively on how a strategic bitcoin reserve could benefit the US financial system. Lummis compared this potential reserve to the US Strategic Petroleum Reserve and gold holdings, emphasizing its role in managing national debt. Despite her optimism for some crypto-specific legislation, like the stablecoin bill co-authored with Senator Kirsten Gillibrand, Lummis has also acknowledged that the bitcoin treasury reserve bill may not see serious consideration until after upcoming elections.
3. Updates on Mt. Gox Creditor Repayments
Mt. Gox moved approximately 47,229 BTC, worth around $2.7 billion, to a new wallet address. This transaction is part of an ongoing effort to repay creditors who lost funds during the exchange’s collapse in 2014. The move marks one of the largest single transfers of Bitcoin by Mt. Gox and is a precursor to a planned $9 billion payout, which includes Bitcoin, Bitcoin Cash, and fiat currency. As of July 31, Mt. Gox has completed several test transactions and distributed funds to selected crypto exchanges, such as Bitbank and Bitstamp, which are facilitating the repayments. Despite these substantial movements, Mt. Gox still holds approximately $5.29 billion worth of Bitcoin, suggesting that a significant portion of the total assets still remain to be distributed.?
Why it Matters:?
This impact of large-scale transfer and threat of supply shock continues to raise concerns, as the release of a large volume of Bitcoin could lead to sell-side pressure. However, many creditors may prefer to hold onto their Bitcoin rather than sell immediately, potentially mitigating any immediate negative effects on the market. Recently, AlphaPoint CEO & Co-founder Igor Telyatnikov spoke with Blockworks about how the Mt. Gox catastrophe served as the wake-up call that the crypto industry needed, exposing critical flaws in security infrastructure and prompting many of the necessary reforms and innovations that have since propelled the market forward.
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4. US Presidential Candidates Establish Stances on Crypto Policy
At last week’s Bitcoin 2024 conference in Nashville, former President Donald Trump announced significant pro-crypto policies as part of his presidential campaign. Trump promised to replace SEC Chair Gary Gensler, who is widely criticized in the crypto industry for his stringent stance on digital assets. He also pledged to end "Operation Chokepoint 2.0" and other policies perceived as anti-crypto. Trump declared a halt to the sale of the 213,000 bitcoins held by the US government, valued at approximately $14.5 billion, instead committing to creating a "strategic bitcoin reserve" as a national asset.
Vice President Kamala Harris has signaled a potential shift in the Democratic Party's approach to the cryptocurrency industry, indicating that her team is exploring ways to reset the relationship with the crypto sector. This includes reaching out to major players such as Coinbase, Circle, and Ripple to arrange meetings, suggesting an intent to engage more constructively with the industry. This outreach comes as voices within the Democratic National Committee and potential presidential candidates recognize the growing influence of the crypto community, which includes an estimated 52 million holders in the US.
Why it Matters:
The crypto industry is seeking more concrete actions from major US political parties, such as reversing previous regulatory actions. As the political landscape shifts, the crypto market is likely to react strongly to these developments, as market behavior has shown a positive correlation with pro-crypto stances , including support for US. bitcoin mining and holding a strategic bitcoin reserve. This dynamic underscores the growing political significance of cryptocurrency as a policy issue in the upcoming elections.
5. Fidelity's Bitcoin ETP and Grayscale's Bitcoin Mini Trust
Fidelity International has launched its Physical Bitcoin ETP on the London Stock Exchange, aimed at professional investors. This product follows the FCA’s approval of crypto-backed ETNs for professional investors. Initially launched in February 2022, the ETP was first listed on the Deutsche B?rse Xetra and the SIX Swiss Exchange. Meanwhile, Grayscale introduced the Bitcoin Mini Trust, a more accessible, low-cost option trading on NYSE Arca under the ticker BTC. Both products are fully backed by Bitcoin.
Why it Matters:?
Fidelity International’s Physical Bitcoin ETP on the London Stock Exchange and Grayscale’s Bitcoin Mini Trust on NYSE Arca represent a pivotal development in integrating Bitcoin into traditional finance. These offerings in the UK and US, two major financial centers, highlight a significant shift as established institutions increasingly embrace cryptocurrencies. This trend not only broadens access to Bitcoin investments but also reflects the maturation of digital assets within regulated frameworks, providing investors with secure and diversified options in these prominent markets.
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