The Bitcoin Blue Chip Dip
Plus: Brussels sprouts conversation
In this week’s edition of The Context, Bitcoin buckles under sell pressure, Ethereum and Solana buckle up for ETFs, and EthCC takes over Brussels.
[BTC Minus]
Industry watchers blamed Bitcoin’s price drop to below $55,000 (a four-month low) on two events: Mt. Gox distributing retrieved funds to creditors and German police selling $379M in seized BTC.
What Journalists Said 🧑💻:
Over 47,000 BTC ($2.7B) had been sent from wallets belonging to bankrupt Mt. Gox as of Wednesday, with Mt. Gox’s former customers due to receive 140,000 BTC ($9B) this month, said Shiraz Jagati (Cointelegraph). “The sheer magnitude of the transfers has put the entire crypto market on edge, with traders and investors closely monitoring every movement.”
What’s more, police in Germany seized 50,000 BTC from a movie piracy site in January and began selling it last month. Given, Bitcoin’s $1.1T market cap, this is “a drop in the ocean,” wrote Ryan Browne (CNBC). “For investors, though, it’s all about how those sales are impacting the mood in the market.”
Bitcoin may already be rebounding, noted Sidhartha Shukla (Bloomberg). Investors poured $438 million into US Bitcoin ETFs on Friday and Monday. They’re “betting the supply overhang that’s pushed the token lower in past weeks has created a buying opportunity.”
PR Perspective 🔎:
It’s natural that much of Bitcoin’s press is about its performance against the dollar. Unlike application-oriented Ethereum, Bitcoin’s primary utility is as an investment tool. The coverage isn’t likely to change if other countries join El Salvador in accepting BTC as legal tender: even major government currencies like the British pound are judged based on how many dollars they fetch at the forex.
[ETH ETF ETA]
Asset managers hoping to offer Ether ETF began submitting amended applications to the SEC. When approved, these ETFs can begin trading on traditional exchanges.
What Journalists Said 🧑💻:
If you thought the SEC already approved Ether ETFs, you’re right. But those were the 19b-4 filings from May, explained Nikhilesh De & Helene Braun (CoinDesk). These are the final registration forms, aka S-1s. Expect some “back-and-forth between regulators and issuers” over fees and expense ratios. That “could wrap up as soon as Friday or take a few weeks still.”
A few prospective issuers have already announced their fees, which range from 0.19% to 0.25%, reported Ben Strack (Blockworks). But it may not matter. Franklin Templeton had the lowest Bitcoin ETF fees, but its inflows were dwarfed by BlackRock and Fidelity.
The introduction of ETFs sent Bitcoin’s price soaring, wrote Hannah Lang (Reuters). Because Ether has less liquidity, inflows into ETH ETFs could lead to an even bigger price boost, according to analysts. “Ether might be coming close to its moment in the sun.”
PR Perspective 🔎:
Ether ETFs aren’t even over the finish line, and asset managers are already proposing Solana ETFs, which shows the industry's eagerness to broaden crypto's appeal to traditional investors. We are witnessing a pivotal moment where crypto is pushing hard into mainstream finance, with all the opportunities and challenges that entails.
[EthCC Field]
EthCC, the biggest annual Ethereum conference in Europe, took place this week in Brussels. Ethereum co-founder Vitalik Buterin gave a keynote.
What Journalists Said 🧑💻:
Top of mind for Ethereum’s “intellectual leader”? Fixing the networks’ weaknesses by making the protocol simpler, said Margaux Nijkerk (CoinDesk). For starters, staking is out of reach for many people and “running a node is technically complicated.”
Buterin is especially concerned with people attacking the network to censor transactions, wrote Tim Copeland (The Block). His approach: automating a response that would fork the network.
The network currently relies on social consensus for chain-building, said Vince Dioquino (Crypto Briefing). While Buterin admitted getting 100% of network participation in a fork would be difficult, he believes “the technological layer [should] present a clear, viable soft fork option for the community to rally around if needed.”
PR Perspective 🔎:
Vitalik is Ethereum’s de facto figurehead. If he’s paying attention to something, you can bet other people will too.
[Tweet Of The Week]
Credit: @DAppaDanDev
[DeFi Definitions]
A segment exploring one particular aspect of DeFi. View previous entries here.
This week: ‘ETF’ by Vasundhara Singh.
A cryptocurrency Exchange Traded Fund (ETF) is a type of investment fund that enables investors to gain exposure to various cryptocurrencies without having to directly buy and store the digital assets themselves.
Similar to traditional ETFs, a crypto ETF pools funds from multiple investors and uses these funds to invest in a diversified portfolio of cryptocurrencies. The ETF is then listed and traded on traditional stock exchanges, providing investors with a convenient way to buy and sell shares in the fund just like they would with any other stock.
The advantage of a crypto ETF lies in its simplicity and accessibility. Instead of dealing with the complexities of purchasing and securing individual cryptocurrencies, investors can rely on the expertise of the ETF managers to manage the crypto assets. Furthermore, it offers a level of regulatory oversight and transparency, which can be reassuring for more risk-averse investors.
With leading global asset management firms such as BlackRock and Fidelity filing bitcoin ETF applications, it will be very interesting to see how it plays out. If approved, these ETF’s will help improve consumer confidence in crypto while opening up new DeFi avenues for crypto projects. A positive public and government reaction to ETF’s will also boost bitcoin liquidity and bullishly impact prices.
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, Andrew Wickerson, Ewan Brewster, Emma Murphy 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 brands through impactful storytelling. Find out more about us here.