Crypto weekly update
28. September 2023  • clock 3 min •  Daniel Mitrovsky

US Lawmakers Call for Spot ETFs – Market Info

Over the past two weeks, the total market capitalisation exceeded €1.01 trillion. The increase in market capitalisation over a 14-day period is 3.80%. The price of Bitcoin has risen by 2.44% over the last 14 days to a current value of over €25,100. Bitcoin’s dominance is currently around 48.9%.

Source: Coinmarketcap

US Lawmakers Call for Spot ETFs

Earlier this week, members of the House of Representatives Financial Services Committee wrote a letter to U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler urging him to act on the approval of a spot BTC ETF.

Four members of the Committee, including Representative Tom Emmer, who represents the Republicans as “Majority Whip” and whose job is to ensure party discipline in the legislature, urged the SEC to proceed with the ETF application approval process. In their letter, the committee members said a bitcoin spot ETF is “indistinguishable” from the crypto futures ETFs that the agency approved back in 2021. For that reason, the agency should no longer delay decisions on spot ETFs from Fidelity, BlackRock or Grayscale. The letter also states that following the Court of Appeals’ decision in SEC v. Grayscale, there is no reason to continue denying these applications under inconsistent and discriminatory standards.

The entire crypto industry is now waiting to see how the Commission will act after the SEC lost a lawsuit regarding its decision to deny Grayscale’s application to convert its fund to a spot ETF. Gary Gensler will already be attending the SEC’s oversight hearing in the Financial Services Committee this Wednesday, so members of that committee will have the opportunity to confront the SEC chairman and ask him all the important questions about the spot ETF approval. Source

Bitcoin’s Whale Dominance Is Weakening

The distribution of bitcoin ownership among different market players is one of the most important indicators of overall market dynamics. According to the latest analysis from Santiment, interesting changes can be observed in the cryptocurrency market in terms of the redistribution of BTC ownership, showing that the dominance of the whales is slowly but surely weakening.

Bitcoin addresses that fall into the “whale” category are defined as those holding between 100 and 100,000 BTC. These addresses have seen their collective BTC ownership decline over the past few months, with the proportion of BTC held by whales falling to 55.5% of the total circulating stock. On the other hand, bitcoin addresses with balances below 100 BTC have seen a new all-time high, and collectively own 41.1% of the available stock already. This indicates a growing interest in BTC among retail investors and smaller players in the market.

The growing number of addresses with smaller balances is confirmation of a consistent outflow of bitcoin from exchanges since July 2021. According to the latest data, there are currently just over two million BTC in exchange wallets, with the decline in the stockpile of BTC on exchanges a move often associated with long-term bullish sentiment.

Looking at the data in more detail, the Bitcoin Exchanges Balance tool from CoinGlass reveals that Binance is currently the largest exchange holder of BTC with approximately 543,892 BTC under its management. However, Binance has seen an outflow of over 15,500 BTC in the last month, which may be related to the problems of its subsidiary Binance.US in the United States. The second largest exchange holding BTC is currently Coinbase, which has 436,235 BTC under management. In third place is Bitfinex, which holds 368,856 BTC, but has also seen outflows of up to 5,183 BTC over the past month. Source

Ethereum Outperformed Facebook & Microsoft

Ethereum, the most popular smart contract platform, has generated cumulative revenue of more than $10 billion since its launch in 2015, according to the latest data. Ethereum has thus outpaced many of the largest software companies in history in this metric.

It took Ethereum approximately 7.5 years to reach a total revenue of $10 billion. Ethereum managed to reach this milestone faster than, for example, the Meta platform (formerly Facebook), which reached this milestone in just over 7.5 years. It took Microsoft up to 19 years to reach this milestone.

Ethereum reached the revenue milestone thanks to fees collected for transactions and other activities on its network. This includes payments for using decentralised financial applications, minting and trading NFTs, or sending payments in cryptocurrencies and tokens.

However, Ethereum’s revenue dropped by more than 77% from the previous year, along with the overall decline of the crypto market. According to data from crypto analytics firm Token Terminal, the decentralised network has only $1.7 billion in revenue so far this year. However, a recent valuation from VanEck suggests that Ethereum network revenue could increase from an expected $2.6 billion a year to $51 billion by 2030 if adoption continues at the same pace as it has been. Source

SEC Delayed Another ETF

The U.S. Securities and Exchange Commission (SEC) is using the maximum time available to it to reach a decision on a spot ETF.

In a 26 Sept. notice, the SEC said it needs a longer period of time to approve or disapprove a proposed rule change that would allow the launch of a spot BTC ETF from ARK 21Shares on the Cboe BZX exchange. The commission’s previous 11 August postponement gave the regulator until 11 November to decide whether to approve, disapprove or postpone the application again.

The deferral came on the same day the SEC deferred a decision on a spot bitcoin ETF application from fund manager GlobalX. It is unclear exactly why the commission decided to reserve a longer period of time to determine the fate of bitcoin ETF applications.

To date, the SEC has not approved any spot BTC ETFs for listing on a U.S.-based exchange. However, many experts believe that after losing the lawsuit, the SEC will have to thoroughly review all applications received. However, we will likely not see final statements on the approval or disapproval of spot ETFs until early next year. Source

The Fed Published a Paper on Asset Tokenization

The Federal Reserve has published a comprehensive working paper addressing the tokenization of Real-World Assets (RWAs). As the financial landscape continues to evolve, these innovative financial instruments are gaining significant attention for their potential to revolutionise investment strategies and reshape traditional markets.

The paper explains that tokenization, like stablecoins, consists of five core components: blockchain, reference assets, valuation mechanism, custody and redemption mechanisms. These elements interconnect the cryptomarket and the reference assets, thereby improving the understanding of their impact on conventional financial systems.

According to the published paper, the estimated market value of tokenized assets on permissionless blockchains as of May 2023 is roughly $2.15 billion. The document explains that asset tokenization offers access to previously inaccessible or costly markets, such as real estate, where investors can acquire interests in specific tokenized properties. Tokenization also makes it easier to borrow funds by pledging tokens as collateral, providing a new way of financing. Transactions involving tokenized assets settle faster than traditional reference assets, which may revolutionise settlement processes in the financial industry.

As tokenization becomes more widespread, traditional financial institutions are increasingly coming into contact with crypto-assets through direct ownership or collateralization. This shift brings new dynamics and interconnections that complement each other and create a new, parallel financial system. Source

Microstrategy Continues BTC Purchases

Microstrategy is not slowing down and continues its aggressive accumulation of BTC. Michael Saylor, co-founder and executive chairman of MicroStrategy announced on Monday that the firm has made an additional 5,445 BTC purchases worth 147.3 million. The average price per BTC purchased was $27,053.

According to a Form 8-K filed by the company with the U.S. Securities and Exchange Commission (SEC), MicroStrategy and its subsidiaries acquired these BTCs between 1 Aug. and 24 Sept. As of 24 September, MicroStrategy and its subsidiaries collectively owned approximately 158,245 BTC, which were acquired at an average purchase price of approximately $29,582 per BTC. Source

Avatar photo

Daniel Mitrovsky


Share with others

More articles with Fumbi