Category: Cryptocurrency

Bitcoin retreats to a one-month low as ETF-led enthusiasm wanes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin slid to the lowest since mid-December as the speculative demand for the token sparked by hype about new exchange-traded funds dissipates, leaving the cryptocurrency in the red since the start of 2024.

The largest digital asset briefly flirted with a drop below $40,000 before trading at $41,160 as of 6:30 AM Friday in Singapore, a decline of 3% in the past 24 hours. Smaller tokens like Ether, Solana and Polkadot also struggled.

Bitcoin surged 157% last year on optimism about the eventual January 11 launch of the first US exchange-traded funds to directly hold the token. Digital assets also got a tailwind from bets on looser monetary policy. Traders are now assessing how much money the ETFs attract and paring expectations for interest-rate cuts.

“This type of correction after a significant run-up is normal for Bitcoin,” said Greg Moritz, co-founder at crypto hedge fund AltTab Capital.

Nine new spot Bitcoin ETFs went live last week, including from BlackRock Inc. and Fidelity Investments. The $25 billion Grayscale Bitcoin Trust converted from a closed-ended structure into an ETF.

BlackRock’s iShares Bitcoin Trust has passed $1 billion in investor inflows. The equivalent figure for the Fidelity Wise Origin Bitcoin Fund is about $880 million. Grayscale’s Bitcoin fund, which was created in 2013, has seen about $1.6 billion in outflows since it started trading as an ETF.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin ETF trades top $4.6 billion in ground-breaking opening day

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The first US ETFs that directly hold Bitcoin got off to a strong start, with billions of dollars changing hands in a historical first day of trading for the long-sought investment vehicles.

Over $4.6 billion worth of shares traded between the almost a dozen US spot Bitcoin exchange-traded funds on Thursday. The Grayscale Bitcoin Trust, which converted into an ETF, saw about $2.3 billion in volume, according to data compiled by Bloomberg. Meantime, BlackRock’s iShares Bitcoin Trust—IBIT— saw over $1 billion change hands.

“This is definitely ground-breaking,” said Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence. “There was no doubt demand would be strong for these ETFs, but the numbers across the board are impressive.”

Still, it’s hard to compare Thursday’s activity to any other day in ETF history. Typically, only one fund that tracks a new asset class begins trading on a single day. It’s unprecedented to see over 10 nearly identical funds all begin at once. But even singling in on one ETF indicates the sheer magnitude of trading.

The Grayscale Bitcoin Trust was the most heavily traded ETF debut on record. To be sure, the product has existed in its trust structure since 2013, and had a nearly $27 billion headstart in asset size.

Trading volume doesn’t indicate buying or selling or investor inflows. Because of the way the funds settle trades, net flows into or out of the products probably won’t be known until at least Friday.

When the initial Bitcoin futures fund began trading in 2021, it saw turnover of almost $1 billion during the entire first day. At the time, the futures fund debut was the second-most heavily traded fund on record.

Psarofagis added a caveat that much of the demand may be from so called “seed” money that is pre-arranged by the fund issuers. Signs of more organic demand, like from retail investors or financial advisors, may come later on as more broker-dealers list the funds on their platforms.

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Bitcoin-spot ETFs authorised by US SEC in Crypto’s big breakthrough

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US regulators for the first time approved exchange-traded funds that invest directly in Bitcoin, a move heralded as a landmark event for the roughly $1.7 trillion digital-asset sector that will broaden access to the largest cryptocurrency on Wall Street and beyond.

The Securities and Exchange Commission, whose three-part mandate includes investor protection, authorized funds from industry heavyweights BlackRock, Invesco and Fidelity to smaller competitors including Valkyrie to begin trading Thursday.

The approvals also mark a rare capitulation by the SEC following opposition that lasted for more than a decade, ever since Tyler and Cameron Winklevoss first proposed a Bitcoin ETF in 2013. BlackRock Inc.’s surprise application last June, followed by an appeals court ruling that called the denial of a different application “arbitrary and capricious,” triggered a blistering rally in the cryptocurrency as speculation that US regulators would finally give their blessing to the structure.

“While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin,” SEC Chair Gary Gensler said in a statement. “Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.”

At the crux of the SEC’s previous rulings against a spot ETF was the argument that no regulated exchange was able to adequately monitor Bitcoin trading in a way that would reliably detect fraud and manipulation. That contention was opposed by Ark, among others, which provided data showing a high correlation between cash trading and the futures contracts that trade on CME Group’s platform.

In reviewing the latest set of proposals, the SEC said it examined the correlation between spot and futures trading at a variety of time intervals and concluded prices moved in such a way that irregularities on exchanges such as Kraken and Coinbase were likely to show up in the futures.

“Because the CME’s surveillance can assist in detecting those impacts on CME bitcoin futures prices, the exchanges’ comprehensive surveillance-sharing agreement with the CME — a U.S. regulated market whose bitcoin futures market is consistently highly correlated to spot bitcoin, albeit not of “significant size” related to spot bitcoin — can be reasonably expected to assist in surveilling for fraudulent and manipulative acts and practices in the specific context of the proposals,” the order said.

The decision comes a day after a false post on the SEC’s X account claimed that the agency had approved the ETFs. The regulator subsequently said that the account had been compromised, causing the price of Bitcoin to fluctuate widely.

Bitcoin was little changed at about $46,300 following the approvals. The original cryptocurrency, which sank 64% in 2022, more than doubled in 2023 in large part because of speculation that the SEC would eventually approve ETFs that will allow investors to get exposure to the token in their traditional brokerage accounts instead of one of the crypto-native startups that have come under increasing government scrutiny following a series of sector scandals and bankruptcies.

“The approval means that both retail and institutional investors now have the ability to diversify their portfolio with crypto exposure without worrying about the complicated issues of custody,” said Campbell Harvey, finance professor at Duke University. “The ETF makes it easy to add to your portfolio.”

Crypto proponents have for years argued that a so-called spot fund that invests directly in Bitcoin would be beneficial to investors and would help bring the industry closer to the more highly regulated world of traditional finance. It also suggests a sort of milestone of maturity for the relatively nascent industry, where skirmishes with regulators came to a climax after the collapse of Sam Bankman-Fried’s FTX empire highlighted risks lurking in the industry.

The landmark decision comes after Grayscale Investments won a key victory over the SEC. A federal appeals court had overturned the rejection of Grayscale’s application to convert its Bitcoin trust into an ETF. The court called the denial “arbitrary and capricious” because the commission failed to explain its different treatment of similar products. ETFs that hold Bitcoin futures were approved in 2021.

The SEC’s loss to Grayscale was one of the reasons why the SEC approved the applications, Gensler said in Tuesday’s statement.

“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot Bitcoin ETP shares,” Gensler said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin prices swing wildly after debunked post claimed ETFs won approval

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin dropped to around $45,000 before recovering losses late Tuesday after a debunked post on the X social-media site falsely claimed that the US Securities and Exchange Commission had approved the issuance of ETFs holding the cryptocurrency.

The agency said shortly afterward that it had not yet granted approval of spot-Bitcoin exchange-traded funds, and that the post that appeared on the regulator’s official X account was untrue. Market participants were caught off guard by the false statement, with the SEC widely expected by analysts to announce a decision Wednesday.

“That was not on my bingo card for today,” said Ophelia Snyder, co-founder and president of 21Shares, which is seeking to offer a Bitcoin ETF with ARK Investments. “I don’t think it will affect the process or what comes next. There’s no way after 10 years of work this could wrap up without any last minute drama.”

The ARK 21 Shares application must be addressed by the SEC by the end of Wednesday. Analysts expect the agency to approve several applications at that time, following a slew of last-minute adjustments to official offering statements this week.

The largest cryptocurrency recently traded at around $45,886. It had surged to as a 21-month high more than $47,000 on Tuesday as optimism grew that approval of the the long-sought ETFs was imminent.

“The entire spot Bitcoin ETF saga has been highly unusual from the beginning and so the tweet made sense in that light,” said Nate Geraci, president of The ETF Store, an advisory firm. “Just add this to the long list of surprising plot twists and turns in the 10-plus year effort to bring a spot Bitcoin ETF to market.”

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US market regulator’s “X” account compromised to falsely say Bitcoin gets ETF approval

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US Securities and Exchange Commission said it had not yet granted approval of spot-Bitcoin exchange-traded funds, and that a post that appeared on the regulator’s official “X” account was untrue.

The post, which included a fake comment purporting to be from SEC Chair Gary Gensler, briefly fueled a jump in the price of Bitcoin. Traders have been speculating for weeks that the agency could approve several of the products as soon as Wednesday.

Gensler said from his own X account that the regulator’s account had been “compromised,” an unauthorized statement was posted and that the agency hadn’t taken action.

The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.

— Gary Gensler (@GaryGensler) January 9, 2024

About a dozen companies have applied to list ETFs backed by Bitcoin in the US. The SEC has until January 10 to take action on at least one of those applications, and crypto insiders have speculated the regulator will use that date to announce a slew of decisions at once.

There are two technical requirements that must be fulfilled before a spot-backed Bitcoin ETF can start trading. First, the SEC must sign off on so-called 19b-4 filings by the exchanges that would list the ETFs. Second, the regulator must approve the relevant S-1 forms, which are the registration applications from the would-be issuers — a list that includes BlackRock and Fidelity.

The SEC is planning to vote on the exchanges’ filings, the 19b-4s, this week, Bloomberg News has reported. The regulator may or may not take action on the issuers’ applications, the S-1s, around the same time. If the SEC grants both sets of required approvals, the ETFs could start trading as soon as the next business day.

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Bitcoin rally cools in countdown to US Spot ETF decision by SEC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin consolidated after a surge past $47,000 on bets that the US is poised to approve the launch of the nation’s first exchange-traded funds investing directly in the world’s largest digital asset.

The token dipped to $46,770 as of 8:56 AM in Singapore on Tuesday after a 6.5% jump on Monday in the US. Its new year climb now stands at 10%, contrasting with drops over the same period in stocks and gold. The crypto market expects a green light for US spot Bitcoin ETFs by a January 10 deadline.

Prospective issuers such as BlackRock Inc., Fidelity Investments and Ark Investment Management updated paperwork with the Securities and Exchange Commission, and the regulator has until Wednesday to take action on at least one of the applications. Speculators are wagering that the agency will announce a slew of decisions at once to avoid handing out a first-mover advantage.

If the funds are approved, the next question is how much money they will woo. Bitcoin is up 172% in the past 12 months in an indication that traders anticipate greater adoption of the digital token by mainstream investors via the ETFs.

“Participants seem to be coming around to thinking that the initial flows will actually exceed expectations,” said Kyle Doane, a trader at Arca.

Applicants amended forms on Monday in the US in a final push to offer spot Bitcoin ETF products more than a decade after the first attempt.

SEC Chair Gary Gensler has repeatedly argued that crypto is rife with fraud and misconduct. The agency cracked down on the sector following a 2022 market rout and collapses such as the bankruptcy of Sam Bankman-Fried’s FTX exchange.

But the SEC last year lost a key legal fight against crypto asset manager Grayscale Investments LLC, spurring speculation that the regulator will have to acquiesce to the spot ETFs.

Critics contend that the products pose a risk for investors given that digital assets are notorious for volatility and attracting illicit activity.

“What’s going to happen, unfortunately, is lots and lots of Americans in our view, are going to get hurt financially,” said Dennis Kelleher, chief executive officer of financial reform nonprofit Better Markets.

The advance in Bitcoin has lifted the digital-asset market more broadly, bolstering smaller tokens like Solana and Cardano. US crypto-linked stocks mostly rose on Monday, setting up a tailwind for Asian peers such as Japan’s Monex Group and Woori Technology Investment Co. in South Korea.

Some crypto watchers wonder whether Bitcoin is ripe for a pullback if and when SEC approval finally lands, since speculators may decide to bank a slice of profits from the token’s rally.

There are “no signs” of a so-called sell-the-news event just yet, Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note. Based on chart patterns, the $51,000 level is a possible target before any such pullback, according to Tony Sycamore, a market analyst at IG Australia Pty.

Looking past short-term price gyrations, “the main result of Bitcoin spot ETF approval will be the marketing machine behind greater Bitcoin awareness, powered by some of the largest names in traditional finance,” wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin rises to highest level in 21 months on ETF approval hope

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin surpassed $45,000 for the first time in nearly two years as anticipation of an approval of an exchange-traded fund investing directly in the biggest token intensified.

The cryptocurrency jumped as much as 4% to its highest level since April 6, 2022 and traded at $44,844 as of 9:45am. Singapore time. Other tokens also advanced with Ether, the second biggest, rising as much as 2.6%.

Bitcoin has risen over 15% since the start of December as a Jan. 10 deadline for the US Securities and Exchange Commission to give its blessing for a spot ETF Bitcoin draws closer.

There’s a fear of missing out among some traders in the US and Europe ahead of the looming approval and investors have started “buying on January 1, first thing New Year’s morning,” said Hayden Hughes, co-founder of social-trading platform Alpha Impact.

Traders are expecting Bitcoin to touch $50,000 soon, riding on the spot ETF optimism.

Bitcoin’s resurgence in the last 12 months has also been driven by a broader risk-on sentiment fueled by expectations of declining interest rates in the US. The rally has partially repaired the damage from a precipitous 2022 crash that reverberated around the crypto industry. The token remains below its 2021 pandemic-era record of almost $69,000.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Cryptos bounce back in 2023: What’s in store for 2024?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Cryptocurrencies witnessed a significant recovery in 2023 following the challenging ‘crypto winter’ of 2022, which was marked by widespread sell-offs, layoffs, contagion concerns, and frauds globally. 2023 also saw India implementing a 30% tax on crypto profits and a 1% tax deduction at source (TDS) on all transactions

In 2023, Bitcoin – the most popular and expensive crypto rebounded from a low of almost $16,000 hitting a high of $44,500, although it failed to reach its all-time high of $68,990.

Ethereum, the second most traded crypto, also made a strong comeback to $2,400 from a low of $1,151.

The biggest surge was seen in Solana that jumped to nearly $80 from a low of $8. Solana also is way off its all-time high of $259.

Cardano, Polygon, Dogecoin, Avalanche were among other popular cryptos that made a strong comeback in 2023.

The UK Financial Conduct Authority estimated that there were nearly 20,000 different cryptocurrencies by the start of 2023, although many of them were no longer traded and would never grow to a significant size.

By November 2023, it was estimated that around 8,800 cryptocurrencies were in existence. The top few gainers saw 80% to 500% return during the year.

Even as 2023 had its fair share of negative developments such as the fall of FTX and Binance, the global markets held and grew their presence.

As per an analysis in September 2023, India despite its regulatory and tax environment, has emerged as one of the top crypto markets by volume.

Total India trade volumes in the last year until October 2023 was around $34 billion. Of this, India’s offshore trading volume is $32 billion. So nearly 93% of total India volume is from offshore exchanges, which do not have registered offices in India or comply with local regulations from July 2022 to October 2023.

An estimated 5.2 million Indian users have moved to offshore platforms since the introduction of TDS.

Now, as 2024 approaches, investors are wondering if these cryptos can build on the gains from the previous year.

So the things to watch out for are if the spot Bitcoin ETF gets approval in this coming year. Also, the Bitcoin halving is expected to happen in April 2024. Ethereum updates are also keenly awaited and so are the rate cuts from global central banks.

But the volatility and uncertainty persists with Wall Street banks and brokerages projecting Bitcoin prices in 2024 at anywhere between $30,000 and $1,25,000.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow