 | 5/30/24 |
Ether spiked near $4,000 after the SEC approved a key element of eight ETH ETF applications.
What’s up? It’s Coinbase Bytes
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
- Ethereum ETFs received approval. How the news surprised market analysts, and the remaining step before ETH ETFs can begin trading.
- Three crypto headlines in focus. Why BTC fell slightly, a key U.S. crypto bill passed in the House, and inflows into digital asset products broke records.
- This week in numbers. The amount of BTC a public medical device firm just bought, the list of countries trying Mastercard’s crypto network pilot, and more stats to know.
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Price changes are for the past week, ending on May 31, 2024 at 12:39 AM UTC
 | ETH SEASON |
Ethereum rallies after spot ETFs gain SEC approval
In January, the Securities and Exchange Commission (SEC) approved the trading of spot bitcoin exchange traded funds (ETFs), helping to kickstart crypto’s 2024 rally.
Last Thursday, crypto markets got another potential boost after the SEC approved applications from exchanges including the NYSE and Nasdaq to list spot Ethereum ETFs from eight firms including BlackRock, Fidelity, and Grayscale. The approvals paved the way for the ETFs to receive a final greenlight on their registration statements and begin trading later this year.
Upon reports that an ETF approval could be imminent, ETH spiked nearly 30% between last Monday and the SEC’s decision last Thursday, from around $3,100 to $3,917. After the approval, ETH fell slightly before reaching as high as $3,973 on Monday.
The SEC’s move came as a surprise to many industry watchers, and could be a sign of growing support in Washington for crypto-related issues in an election year.
Let’s dig in.
Why did the SEC’s approval of Ethereum ETFs come as a surprise?
After the SEC repeatedly delayed making a decision on spot ETH ETFs, many market watchers had little optimism the products would gain approval anytime soon — Bloomberg’s ETF analysts had pegged the odds at just 25% earlier this month. “A week ago, I would’ve said you were a little crazy to think that these ETFs were going to get SEC approval,” Bloomberg analyst James Seyffart said in reaction to the news.
What could have helped propel the approval? According to Crypto Council for Innovation Chief Legal and Policy Officer Ji Kim, “Lawmakers are hearing from their constituents that crypto not only matters but is important and that they want regulation in this space.”
When will ETH ETFs hit the market?
Nobody knows for sure, but it could take a little while — with some analysts anticipating a launch date in July or August.
Last week, the SEC approved the 19b-4 forms related to the ETFs, which are proposals from the exchanges that would list the ETFs. But for the ETFs to begin trading, the SEC still needs to approve the firms’ registration statements (S-1 forms).
What are some big-picture implications of the approvals?
The SEC defined the ETF products as “commodity-based trust shares” in its decision.
“The implications of this classification are potentially significant and wide-ranging,” reports Forbes. “For starters, if more cryptocurrencies are classified as commodities, the SEC’s role in regulating cryptocurrencies could be more limited. Regulation could instead fall more to the U.S. Commodity Futures Trading Commission, or CFTC.”
It could also create a precedent for other cryptocurrencies that are similar to Ethereum, potentially allowing for the creation of a Solana ETF in the future, for example.
The bottom line…
The ETFs could make Ethereum more accessible to institutional investors, which have already poured more than $30 billion into BTC ETFs this year. Crypto analysts at Bernstein predict that the combined BTC and ETH ETF market could grow past $100 billion in the next 18 to 24 months.
Does that mean that crypto prices have room to spike like they did after BTC ETFs began trading? Nobody can say for sure, but most analysts seem to believe that the potential impact has only been partially “priced in” by markets — British banking giant Standard Chartered recently predicted that ETH could hit $8,000 by the end of the year.
| TUNE IN |
How crypto is updating the global payments system
The global payments system is stuck in the fax era. Money doesn’t travel natively on the internet, and swipe fees cost the average American family more than $1,000 a year.
In the first episode of “Evolving Money,” a new podcast from Bloomberg Media Studios and Coinbase, former PayPal president David Marcus explains why crypto is the key to updating a system that is rooted in the 1970s.
| MARKET BYTES |
BTC dipped slightly, U.S. House voted ‘yes’ on crypto, and more
Last week packed in a year’s worth of crypto headlines: The U.S. House of Representatives gathered bipartisan support to send a landmark piece of crypto legislation to the Senate; the SEC seemingly reversed course and gave a green light to spot ether ETFs; and BTC looked to be on track for a new all-time high.
This week, however, the reemergence of billions of dollars worth of BTC from crypto’s early days may have cooled prices slightly. Let’s dig in.
1. The reemergence of 10-year-old BTC tied to Mt. Gox briefly cooled prices
On Monday, BTC worth at least $2.9 billion began to move out of a wallet connected to Mt. Gox — a Tokyo-based crypto exchange that went bankrupt in 2014. BTC prices dipped around 4% after the news broke, presumably over the uncertainty around whether the BTC’s owners would sell or hold onto the crypto.
In the decade following Mt. Gox’s failure, a court-appointed trustee has been unraveling the ownership of at least 137,000 BTC (now worth more than $9 billion), with a deadline of October 31 to return the coins.
- The longer-term impact? The Mt. Gox funds should only have a temporary effect on prices, according to the CEO of Australian exchange BTC Markets. “Mt. Gox would certainly nudge the price but it won’t have an entrenched impact on Bitcoin’s price as the broader market is now focused on the bipartisan support coming from U.S. lawmakers around crypto-friendly regulations,” BTC Markets’ CEO said.
2. U.S. House of Representatives passed landmark ##### bill
Last Wednesday, the House of Representatives passed The Financial Innovation and Technology for the 21st Century Act (#####) with bipartisan support. The bill is now headed to the Senate.
Among many other things, ##### would clarify questions around which agencies (the SEC or the CFTC) have the responsibility to regulate various aspects of the crypto industry, create consumer protections for the 52 million Americans who own crypto, and give web3 developers looking to launch projects in the U.S. clear rules of the road.
- Crypto coalition… According to a new Harris Poll commissioned by ETF issuer Grayscale, crypto is an increasingly important issue for voters. One third of surveyed voters (33%) said that candidates’ support of crypto will be a key consideration and more than three quarters (77%) said that a presidential candidate should understand crypto.
“Likely American voters from across the political spectrum indicate a heightened interest in investing in crypto assets and in supporting candidates well-versed in the emerging technologies,” said Grayscale’s head of research. (If you want to know where your representatives stand on crypto issues, or learn how you can get involved, check out Stand With Crypto.)
3. Crypto investment products have already broken a yearly record
Even though it’s only May, crypto investment products have already seen yearly inflows set an all-time high around $14.9 billion, according to the latest CoinShares report.
A huge percentage of that figure, of course, comes from the emergence of spot BTC ETFs, which began trading in January to blockbuster success.
- Flow state… Around $1.1 billion in new capital flowed into BTC ETFs last week — the highest figure since March. BlackRock’s IBIT fund has led the pack in new inflows, with IBIT’s total value reaching $19.7 billion (as of Wednesday), helping it eclipse Grayscale’s GBTC as the biggest crypto fund.
| NUMBERS TO KNOW |
3 million
Approximate value of lost BTC recovered from an 11-year-old crypto wallet with a broken password by famous hardware hacker Joe Grand. Grand previously helped another user recover $2 million in lost crypto. (Learn how to keep your crypto secure.)
581
Amount of bitcoin (worth about $40 million) that medical device company Semler Scientific announced it purchased on Tuesday. The firm said “we are energized by the growing global acceptance and ‘institutionalization’ of bitcoin.”
18
Age of the iconic Shiba Inu that inspired the “Doge” meme and Dogecoin, when she passed away last Friday. The beloved, internet-famous dog received an outpouring of tributes, including from Elon Musk and Dogecoin co-creator Billy Markus, who tweeted, “Kabosu will live forever in our hearts.”
13
Number of countries, including Argentina, Brazil, France, and Spain, that are participating in Mastercard’s new pilot peer-to-peer crypto network, which allows users to transfer funds across borders. According to the credit-card giant, the P2P network “is the first of many possible use cases that Mastercard Crypto Credential aims to support. Others may extend to NFTs, ticketing, and other payments solutions.”
| TOKEN TRIVIA |
Which U.S state became a BTC whale this month?
| A | Wyoming |
| B | Texas |
| C | Ohio |
| D | Wisconsin |
Find the answer at the end of the email.
Trivia answer
| D | Wisconsin |
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