Bitcoin’s value surged to a two-week high of $28,103 on June 20, providing a glimmer of hope to bullish traders that the digital currency could finally snap its ten-week downturn. This bounce came in spite of recent headwinds caused by the SEC’s enforcement actions against Binance and Coinbase.
The recent rally is largely attributable to escalating institutional interest in Bitcoin, particularly from financial giants such as BlackRock and Fidelity Investments, both of which are reportedly gearing up to submit applications for Bitcoin ETFs.
The uptick in Bitcoin’s value kicked off after BlackRock, the world’s biggest asset manager with over $8.5 trillion in managed assets, announced on June 15 that it had filed an application with the SEC to establish a Bitcoin ETF in the US. Despite not being the first applicant, BlackRock’s sheer scale sets it apart from its predecessors.
Thus far, the SEC has consistently declined Bitcoin ETF proposals, with past hopefuls including Cathie Wood’s ARK, 21Shares (which has submitted three applications), and Grayscale. The latter challenged the SEC’s denial in an appeals court, contending the legitimacy of Bitcoin futures.
According to BlackRock’s SEC filing, the firm plans to enlist Coinbase for holding the Bitcoin associated with its ETF. This move has also indirectly propelled Grayscale’s ETF, which is inching towards 2023 highs with a discount of less than 37%.
A further boost to Bitcoin’s value is the receding U.S. Dollar Index (DXY). As a rule of thumb, when the DXY pulls back, investors typically show greater inclination towards riskier assets, Bitcoin included.
In conclusion, Bitcoin’s price hike today seems to be fuelled by multiple factors: institutional interest from behemoths like BlackRock, the positive impact on Grayscale’s ETF, and the ebbing DXY, creating a promising environment for the cryptocurrency to break its prolonged losing streak.
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Grayscale Bitcoin Trust (GBTC) is approaching its highest levels of 2023 following the filing of a Bitcoin spot price exchange-traded fund (ETF) by BlackRock, the world’s largest asset manager.
The news has generated institutional buying interest in GBTC, the original institutional BTC investment vehicle.
According to data from CoinGlass, on June 17, GBTC came close to reaching new 2023 highs.
This rally comes as Bitcoin market sentiment experienced a modest improvement with the anticipation that BlackRock’s ETF filing could potentially overcome the legal obstacles that have hindered similar ETFs in the United States.
Meanwhile, there are signs of optimism beyond sentiment as GBTC’s long-standing discount to BTC spot prices narrows.
The discount, often referred to as a negative “premium,” is currently at -36.6%, a significant improvement compared to the discount of around -44% observed on June 13. While still discounted, GBTC is trading closer to zero than it has been at almost any other time this year.
Many observers believe that if BlackRock’s ETF is approved, GBTC will be the primary beneficiary. Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, expressed optimism about the prospects of BlackRock’s offering gaining regulatory approval and its potential to resolve GBTC’s discount alongside industry growth.
The BlackRock move has sparked debates as to whether it can be classified as an ETF. Some argue that it will resemble a trust similar to GBTC, while others, including Cochran, believe it qualifies as an ETF under the Securities Act of 1933. Regardless of the classification, investor interest in GBTC is rising in response to BlackRock’s filing.
Hedge fund North Rock Digital announced that it has been consistently accumulating more shares of Grayscale trusts in recent weeks.
It expects significant upside potential if Grayscale wins and minimal downside risk if they lose. Another major holder, ARK Invest, has not yet increased its exposure to GBTC, and data from Cathie’s ARK confirms a gradual decline in their holdings throughout 2023.
Overall, the prospect of BlackRock’s involvement in the cryptocurrency market has stimulated the demand for GBTC and boosted market sentiment.
The narrowing of GBTC’s discount suggests growing confidence among investors, while the debate surrounding the classification of BlackRock’s product highlights the evolving regulatory landscape surrounding cryptocurrency ETFs.
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Centralized crypto exchanges were identified as a potential hurdle to the growth of crypto investments in the future. Recent legal actions taken by the United States Securities and Exchange Commission against major exchanges Coinbase and Binance exemplify the challenges faced by centralized exchanges.
Australia’s crypto exchanges have also encountered obstacles, with Binance Australia suspending Australian dollar-denominated services and Westpac, Australia’s second-largest bank, prohibiting transactions with the exchange.
Additionally, Commonwealth Bank, the country’s largest bank, expressed concerns about the high risk of scams associated with crypto exchanges and may decline certain payments to them.
Despite considering themselves as “risk averse,” a surprising 31% of young Australian investors, specifically those in the 18-24 age group, hold or have traded cryptocurrencies in the past year, according to a study conducted by the Australian Securities Exchange (ASX).
The study, which included cryptocurrency as an asset class for the first time, revealed that 46% of these young investors preferred “stable returns,” highlighting the contradiction between their risk aversion and their significant investment in crypto.
Researchers attribute the interest of young people in cryptocurrencies to their desire to differentiate themselves from previous generations, coupled with the fact that many of the 1.2 million new investors who have entered the market since 2020 are tech-savvy and active on social media.
The ASX study, conducted by financial research firm Investment Trends, found that young investors in the “next generation” category had a median cryptocurrency holding of $2,700, representing 6% of their total portfolio, twice the 3% allocation observed among other age groups.
Interestingly, although young investors had the highest crypto allocation relative to their portfolios, it was the “wealth accumulators” between the ages of 25 and 49 who owned the largest share of cryptocurrency, accounting for 69% of the total investment in digital assets. Investors aged 50 and above held only 19% of the overall crypto ownership.
While the report acknowledges the volatility of cryptocurrencies, it recognizes their popularity among investors.
It revealed that 29% of potential investors who currently do not invest in any capacity are considering some form of crypto investment within the next year. However, the report maintains a cautious approach, stating that the full acceptance of cryptocurrencies in mainstream investing is still a topic of debate.
The ASX’s report, based on an extensive online survey of 5,519 Australian adults conducted in November 2022, provides valuable insights into the growing interest in cryptocurrencies among young Australians.
While young investors exhibit both risk aversion and significant crypto investments, the report highlights the evolving landscape of investing and the potential challenges faced by the crypto industry as it seeks mainstream acceptance.
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BlackRock, the world’s largest asset manager, has filed for a bitcoin exchange-traded fund (ETF) in an effort to provide investors with exposure to the cryptocurrency amidst growing regulatory scrutiny.
The iShares Bitcoin Trust, BlackRock’s proposed ETF, will utilize Coinbase Custody as its custodian, as stated in a filing with the U.S. Securities and Exchange Commission (SEC). However, the SEC has yet to approve any applications for spot bitcoin ETFs.
BlackRock had previously launched a spot bitcoin private trust for institutional clients in the United States. This recent move by the asset manager comes at a time when the global cryptocurrency industry is facing increased attention from regulators regarding potential violations of securities laws. In fact, earlier this month, the SEC filed lawsuits against prominent exchanges Coinbase and Binance, which had significant repercussions throughout the digital assets sector.
Joshua Chu, the group chief risk officer at blockchain technology group XBE, Coinllectibles, and Marvion, viewed BlackRock’s filing as a positive development in the pursuit of regulatory approval. The involvement of a reputable and established asset management company like BlackRock indicates the resilience of public interest in cryptocurrencies.
A spot bitcoin ETF would track the underlying market price of bitcoin, enabling investors to gain exposure to the cryptocurrency without directly purchasing it.
Notably, the SEC rejected Grayscale Investment LLC’s application last year to convert its flagship spot Grayscale Bitcoin Trust into an ETF. Grayscale subsequently sued the SEC, claiming arbitrary decision-making, as the regulator had previously approved bitcoin futures ETFs while rejecting spot bitcoin ETF applications. Firms such as Fidelity, Cboe Global Markets, and NYDIG have also had their spot bitcoin ETF proposals rejected by the SEC.
Following the announcement of BlackRock’s ETF filing, bitcoin prices experienced a 2% increase on Thursday, with the cryptocurrency valued at $25,506 on Friday. Year-to-date, bitcoin has seen a 54% surge in value.
Reports of BlackRock’s plans for a bitcoin ETF were initially published by CoinDesk earlier on the same day.
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The Hong Kong Monetary Authority (HKMA), the region’s banking regulator, encouraged lenders in April to cater to the business requirements of licensed crypto exchanges. This announcement was a response to a Financial Times report suggesting that banks, including HSBC and Standard Chartered, were facing pressure from HKMA to accept crypto exchanges as clients.
Hong Kong, aiming to become a leading global hub for cryptocurrency, has taken numerous measures, such as attracting mainland China crypto firms and proposing the testing of a digital dollar in its mortgage market. The report noted that the UK-based lenders HSBC and Standard Chartered, along with the Bank of China, were probed by the HKMA last month regarding their hesitance to accept crypto exchanges as clients.
In an April 27 letter to the lenders, the HKMA highlighted that due diligence on prospective customers should not pose an “undue burden”, particularly for companies establishing offices in Hong Kong. Both Standard Chartered and HSBC confirmed their continuous dialogue with regulators on a variety of topics and ongoing involvement in the evolving crypto policies and developments in Hong Kong.
This push by Hong Kong for banks to incorporate crypto clients into their portfolios comes at a time when other nations like the U.S. are intensifying their scrutiny on crypto exchanges. The U.S. affiliate of Binance, for instance, had to cease dollar deposits last week after the U.S. Securities and Exchange Commission requested a court to freeze its assets.
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A heated debate erupted on Crypto Twitter this week, pitting billionaire investor Mark Cuban against former SEC official John Reed Stark. Cuban criticized SEC Chair Gary Gensler for his “regulation via litigation” strategy, which he believes is harming crypto startups.
The feud, which began on June 14, ignited over Stark’s support for the SEC’s recent lawsuit against Binance, a leading cryptocurrency exchange. Cuban contended that Stark was misjudging the lawsuit’s repercussions and blamed Gensler’s approach for undermining cryptocurrency businesses.
Stark had previously insisted that regulators treat crypto businesses as large-scale enterprises. However, Cuban disagreed, arguing that most crypto startups are small entities and should not be required to hire securities lawyers just to launch their businesses.
Moreover, Stark commended the SEC’s action against Binance, stating it would eradicate “bad actors” and foster transparency within the largely unregulated industry. This steered the conversation towards an examination of how cryptocurrencies should be regulated.
Stark held the view that crypto assets should not be seen as pink sheets or stocks. In contrast, Cuban dismissed Stark’s perspective as biased, advocating instead for tokens to be regarded similarly to other securities. He called on the SEC to establish more lucid guidelines.
Mark Cuban, known as an American entrepreneur and investor, has evolved from initially labeling Bitcoin a pyramid scheme in 2017 to supporting digital assets today. Conversely, John Reed Stark, ex-chief of the SEC’s Office of Internet Enforcement and a moderate crypto skeptic, frequently shares his legal perspectives on digital assets with his 21,000 Twitter followers.
While the debate ended with Cuban acknowledging that many blockchain companies and tokens might fail, he emphasized that the successful ones would be “game changers,” reflecting the typical lifecycle of tech firms. Cuban concluded by championing crypto’s potential impact on the broader economy, cautioning that both the irrational hatred of crypto, which he terms “Crypto Derangement Syndrome,” and the overhyping of its potential could have negative effects.
In a recent interview with the Wall Street Journal, Coinbase CEO Brian Armstrong insisted that the regulation of cryptocurrencies isn’t as complicated as it might seem. He expressed his confidence that the United States would achieve clear regulatory guidelines for the crypto industry, even though it might take time.
This interview comes on the heels of a lawsuit filed against Coinbase by the Securities and Exchange Commission (SEC) on June 6, alleging that the exchange was operating as an unregistered securities exchange, broker-dealer, and clearinghouse. Armstrong argued in the interview that Coinbase’s operations do not require these registrations.
“The assets that we trade are commodities, not securities, hence they do not necessitate such registrations. We operate our exchange on crypto commodities,” Armstrong explained.
He also noted that despite not claiming to be a broker-dealer, Coinbase had faced difficulties in activating its acquired broker-dealer license.
When discussing regulations, Armstrong argued that crafting sensible rules is not “rocket science,” and he expects the U.S. to arrive at the correct regulatory framework over time. He believes the SEC lawsuit against Coinbase is significant for the entire U.S. crypto industry, as he hopes it will bring more clarity and prevent the U.S. from lagging behind other countries in this arena.
Armstrong is optimistic that once clear and stable regulations are established in the U.S., it would encourage crypto businesses to return to the country. He stated, “We expect entrepreneurs who had left the U.S. to return, as they won’t be randomly targeted or face high legal bills unexpectedly.”
A previous report by Cointelegraph noted a 26% decline in the share of global crypto developers in the U.S. between 2018 and 2022, attributing this decrease to regulatory ambiguity.
Armstrong emphasized that clarity is needed, especially in defining the roles and boundaries of the two major U.S. financial regulators, the SEC and the Commodity Futures Trading Commission (CFTC).
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Amidst the lawsuits by US regulators against leading competitors Binance and Coinbase, cryptocurrency exchange Bitget has observed a significant upsurge in new account registrations from Latin America. The platform reported a 43% increase in new users from the region between June 6 and 9 compared to the daily averages, with Brazil and Argentina driving the growth, as per a Bitget spokesperson.
In Brazil, the number of new Bitget clients soared by 54%, with total deposits experiencing a 208% spike. In Argentina, the customer base and total deposits grew by 33% and 87% respectively. The crypto exchange, which also operates in Venezuela, Colombia, and Mexico, reported a 134% rise in total regional deposits during this period.
With over 8 million customers in 100 countries, Bitget didn’t disclose the total user count in Latin America. The uptick in figures is attributed to the recent regulatory developments in the US, where the SEC sued Binance on June 5 on 13 charges, leading to Binance net outflows of $3.128 billion over the past week, while Bitget’s deposits increased by $14.8 million.
Gracy Chen, Bitget’s Managing Director, expressed her confidence in the industry’s resilience despite recent upheavals, stating that “favorable policies are being implemented in places like Hong Kong, Dubai, Singapore and new opportunities are emerging.”
On June 6, Coinbase, another major crypto exchange, was sued by the US SEC for allegedly dealing in unregistered securities. The SEC Chair accused Coinbase of failing to provide adequate protection against fraud, manipulation, and conflicts of interest, leading to an overnight change of 113.06% in Coinbase’s trade volume, which reached $1.5 billion.
Interestingly, both Binance and Coinbase have been actively expanding their local operations in Brazil, a market of significant importance to these exchanges.
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The cryptocurrency market has been hit hard with Bitcoin dropping to a three-month low of $25,483 on June 10, a significant decrease of over $1,200 from the previous day, according to data from Cointelegraph Markets Pro and TradingView. Despite this, Bitcoin has fared better than major altcoins, which have suffered severely from US regulatory scrutiny.
The recent legal action by the U.S. Securities and Exchange Commission (SEC) against leading exchanges, Coinbase and Binance, has resulted in certain altcoins being delisted. In response, Robinhood, a popular trading app, revealed it would cease support for several cryptocurrencies implicated in the lawsuit. These include Cardano, Polygon, and Solana, which are expected to be dropped on June 27th, 2023 at 6:59 PM ET.
The announcement sparked a notable decrease in the value of the affected cryptocurrencies, with Cardano and Solana recording a 25% loss in 24 hours. Robinhood justified this move stating it regularly reviews its crypto offerings, and the decision was based on the latest assessment.
Crypto.com CEO, Kris Marszalek, expressed that such delistings and regulatory pressures are part of the growth and maturation process of the crypto industry. He anticipates the sector will emerge stronger, despite the current challenges. The platform also revealed that it would stop its U.S. institutional trading service from June 21.
Michaël van de Poppe, CEO of trading firm Eight, highlighted the significant impact of these developments on the overall cryptocurrency market capitalization. If the total market cap drops below its 200-week moving average (MA), currently standing at nearly $26,400 for Bitcoin, it will indicate a clear bearish trend. Van de Poppe conveyed his concern to his Twitter followers, suggesting that the worst might be yet to come.
The Commonwealth Bank of Australia (CBA), the country’s largest financial institution, has announced plans to restrict specific payments to cryptocurrency exchanges due to concerns about potential scams. This decision aligns with similar actions from other major banks and follows a series of legal challenges faced by global exchanges from US regulatory bodies.
Earlier this month, CBA disclosed its intention to either decline or impose a 24-hour hold on “certain payments to cryptocurrency exchanges”. The bank cited the need to shield its customers from the scam risks linked to such transactions. Specific details about the types of payments to be affected have not been revealed publicly, due to concerns over scammers potentially bypassing the restrictions.
In a bid to further safeguard its customers, CBA also stated plans to cap the amount individuals can send to cryptocurrency exchanges at AUD $10,000 (approximately $6,650) per month, to be rolled out in the near future.
CBA’s general manager of fraud management services, James Roberts, highlighted that scammers worldwide are exploiting the growing interest in cryptocurrencies, presenting themselves as genuine investment opportunities or funneling funds into crypto exchanges. The bank assured that these protective measures would be subject to continuous review and assessment of their impacts.
This new stance marks a significant shift for CBA, which had previously shown a more crypto-friendly approach. In November 2021, the bank was preparing to roll out cryptocurrency trading services for its CommBank app users, signifying its intent to actively participate in the burgeoning sector. CBA’s CEO, Matt Comyn, acknowledged risks in the sector but highlighted that the potential perils of non-participation were far greater. He maintained that both the technology and the sector were here to stay.
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