Friday, 9 February 2024

Market Summary

Market Summary 9 February 2024

Bitcoin Price: US$45,288.65 (+2.12%)
Ethereum Price: US$ 2,419.55 (-0.23%)

ARK 21Shares has refiled its spot Ethereum exchange-traded fund (ETF) application, altering it to mirror its approved Bitcoin ETF by implementing a cash-creation model and considering adding staking to generate extra income, detailed in its latest Form S-1 amendment filed on Feb. 7. The firm anticipates staking Ether from the trust’s cold vault balance, with acknowledged risks such as slashing and potential lockup periods for staked ETH. While Bloomberg analysts suggest the SEC might not allow staking in spot Ether ETFs, they expect decisions on all ETF applicants, including VanEck, ARK 21Shares, and others, by May 23. In related news, spot Bitcoin ETFs experienced significant trading volume surpassing $1 billion on Feb. 7, led by BlackRock’s iShares Bitcoin Trust, while inflows into spot Bitcoin ETFs continued to outweigh outflows from GBTC, with Fidelity now allocating spot Bitcoin to their All-in-One Conservative ETF. Additionally, Hong Kong plans to regulate over-the-counter (OTC) crypto trading under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) starting June 2023, subjecting OTC traders to similar requirements as retail digital assets traders, with a consultation period running until April 12.

Darin Feinstein, founder of Core Scientific and Blockcap, asserts that spot Bitcoin exchange-traded funds (ETFs) are superior to traditional commodities-based ETFs like gold ETFs due to their verifiable holdings on the immutable Bitcoin ledger, offering unprecedented transparency and security. Feinstein highlights the real-time tracking enabled by the Bitcoin network and contrasts it with the opacity surrounding physical gold storage and auditing. Despite some concerns, Bloomberg ETF analyst Eric Balchunas views holding Bitcoin as beneficial for spot ETF issuers, akin to physically backed gold ETFs. In other news, a Montenegro court has revoked the extradition of Terraform Labs co-founder Do Kwon, accepting an appeal and returning the case for retrial due to procedural violations. Meanwhile, Ethereum’s upcoming Dencun upgrade on March 13 aims to lower transaction costs on layer 2s through proto-danksharding and blobs, potentially reducing roll-up costs by up to 10 times and addressing concerns over Ethereum’s scalability.

U.S. spot Bitcoin exchange-traded funds (ETFs) currently constitute only 10-15% of the total Bitcoin spot trading volume across centralised exchanges globally, holding approximately 650,000 BTC or 3% of the outstanding Bitcoin supply, according to a Coinbase report. While ETFs have been hailed as a significant development, Coinbase analysts David Duong and David Han caution against overestimating their short-term impact, suggesting that attention should be redirected to emerging trends post-ETF, such as decentralised finance (DeFi) activity and potential selling pressure on Bitcoin miners. Meanwhile, Apple’s recent launch of the Vision Pro spatial computer, an augmented reality headset, could signal a major move towards spatial computing, potentially impacting consumer technology similarly to the iPhone’s revolutionary effect in 2007. Additionally, president Eric Anziani anticipates that the Markets in Crypto-Assets (MiCA) legislation in Europe could streamline regulatory compliance for cryptocurrency exchanges, facilitating their expansion across the continent amidst increasing regulatory scrutiny.


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