In this week’s edition of The Context, the dangers of tweeting and a new hope for an ETF. Here are the top stories and how they were covered, along with our take:
[Grayscale Tiptoes Toward ETF]
The Securities and Exchange Commission (SEC) did not appeal a court ruling that invalidated its reason for rejecting Grayscale’s proposed Bitcoin exchange-traded fund. Grayscale had asked the SEC’s permission to shift its Bitcoin trust to an ETF; the latter trades like a stock on traditional exchanges, meaning retail investors could get exposure to BTC while they’re buying, say, Amazon or Disney shares. 📈
What Journalists Said 🧑💻:
A Bitcoin ETF is now “all but certain” to debut in the coming months, wrote Jeff John Roberts (Fortune)—but not because SEC chief “Gary Gensler had a change of heart.” It’s more likely that the agency threw in the towel because “its legal resources are already stretched thin in light of Gensler’s campaign against crypto.”🤔
Bloomberg Intelligence sees an ETF as “inevitable” as well, reported Vildana Hajric (Bloomberg), and the Grayscale Bitcoin Trust is surging on the news. After trading at nearly a 50% discount 🏷️ to actual Bitcoin, GBTC “is trading about 14% intraday below the value of its underlying holdings, the narrowest such reading going back to 2021.”
Will the price of Bitcoin be buoyed by an ETF as institutional and retail investors alike pour in? Daniel Kuhn (CoinDesk) wasn’t sure. “Bitcoiners have been widely off the mark in the past when ‘not giving financial advice,’ including on the claim that BTC is a hedge against inflation, destined to hit $100,000 or would be widely adopted as a global reserve currency.” 💸
Why It Matters ⁉️:
The arrival of a Bitcoin ETF could have implications for the price and reach of the asset. In fact, another event this week tested that theory…
[Delete Your Tweet 🤦♂️]
After Cointelegraph incorrectly tweeted that the SEC had approved BlackRock’s Bitcoin ETF application, the price of BTC jumped more than 5% within hours, reaching above $30,000 on some exchanges and triggering liquidations 📈. After the rumor was debunked, Cointelegraph issued an apology, blaming its social media team for posting without confirming the source.
What Journalists Said 🧑💻:
In a panel discussion at Future Blockchain Summit Tuesday, Cointelegraph editor-in-chief Kristina Lucrezia Cornèr said that, although such mistakes “cannot happen,” the error was a symptom of modern media incentives. “This is what happens when we are having constant pressure to be the first with every news.” 😰
Do better, urged Michael McSweeney (Blockworks) in an opinion piece. While “Cornèr is describing a real issue,” the stakes are huge and require “slower, smarter, more thoughtful” media. “A crypto publication can move markets — act accordingly.”
But the market movement may not be done, as Bitcoin hasn’t shed all of those gains. After Eleanor Terrett (Fox Business) confirmed that BlackRock 🪨 hadn’t gotten the SEC’s okay, CEO Larry Fink went on the network to explain: “It’s just an example of the pent-up interest in crypto…Some of this rally is way beyond the rumor.” 🧐
PR Perspective 💭:
This event highlights why traditional financial markets, regulators, and institutional investors often struggle to take crypto seriously. Inaccurate information, manipulation, and speculative fervor can undermine trust and the maturation of the crypto industry. The space needs responsible journalism, including fact-checking, source verification, and ethical reporting practices to ensure that the industry gets positive attention.
[Uniswap Fee 🦄]
Uniswap 🦄, the top decentralized exchange by trading volume, announced it would begin charging a 0.15% fee to swap between Ether, Wrapped Ether, Wrapped Bitcoin, and stablecoins on Uniswap Labs’ interfaces. (The Uniswap protocol is open source, meaning others can build their own interfaces from it.) The fee is separate from a Uniswap protocol fee switch, which would have to be decided on and approved by holders of the UNI governance token.
What Journalists Said🧑💻:
This is “more aggressive” than fees from centralized exchanges [which also have higher volume], but lower than MetaMask Swaps, which charge a 0.875% fee, noted Andrew Thurman (Blockworks). “The fee would have generated an estimated $22 million in revenue YTD for Uniswap Labs.” 😲
This fee is just another in a long line of moves that disregard UNI holders, wrote Protos. “The proceeds of the UNI token sale 🏷️ were supposed to fund Uniswap-related development. However, people who bought and voted with that token, despite their years of contribution, will not benefit” from this new fee.
That’s one argument, according to yyctrader (The Defiant). Another is that the entire Uniswap ecosystem will benefit from a “sustainable business model for Uniswap Labs,” which “has continued to ship 🛳️ new products, releasing an iOS wallet, Android wallet, UniswapX, significant enhancements to their web app 📲, Permit2, and the draft codebase of Uniswap v4.”
Why It Matters ⁉️:
While DeFi aims to cut out intermediaries, someone needs to be incentivized to actually build new products. As Uniswap looks to solidify its business model, the industry will be watching to see how users react.
[Tweet of the week]
Credit: @jacqmelinek
[DeFi Definitions]
A segment exploring one particular aspect of DeFi.
This week: “Gas Fees” by Celina Chu
Gas fees are an integral part in the world of blockchain and cryptocurrency, representing the cost required to perform transactions or functions on a blockchain network. This cost serves as a way to price the computational effort required to process and validate transactions on a blockchain.
Gas fees can be broken down into 2 components: gas units and gas price. Gas units represent the amount of computational work needed for a specific operation. While gas price refers to the amount of cryptocurrency a user is willing to pay to achieve a transaction settlement.
The cost of gas fees follow a supply and demand mechanism and is updated in real time based on current network demand. These fees vary depending on the network congestion, complexity of transaction computations and demand for computational resources. Users can adjust their fee offering based on their needs for a faster-but-more costly settlement or a slower-but-less-costly settlement. This is because miners or validators will prioritise transactions with higher fees to maximise their earnings.
They are used for a multitude of reasons including incentivizing miners or validators to include transactions in blocks and preventing network abuse by requiring users to pay a fee for using computational resources. When interacting with blockchain networks, users must take into account gas fees to strike a balance between transaction speed and cost.
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
The team: Founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Ewan Brewster, Damian Alvarez, Andrew Wickerson, Tiffany Mac Sherry, Becky Corbel and Delon Chan. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and Web3 brands through impactful storytelling. Find out more about us here.