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June 26, 2023

Bitcoin Records Year High Above $31,000 on Institutional Wave

June 26, 2023

The crypto industry witnessed a dynamic week of developments as Bitcoin surged to new yearly highs amidst groundbreaking institutional support. 

Notably, Charles Schwab, Fidelity, Citadel, the Federal Reserve, and Valkyrie all had a role to play in lifting Bitcoin prices by more than 16% in a single week. 

Furthermore, the approval of the first-ever leveraged Bitcoin Futures ETF by the SEC helped to carry optimism from BlackRock’s mid-June submission of a Bitcoin Spot ETF.

Alongside increased institutional adoption, a new report has highlighted that over half of Fortune 100 companies have actively participated in crypto projects since 2020, with substantial investments and increased budgets expected in the coming years.

  • Bitcoin touches year highs as major players make waves in the crypto industry
  • First-ever leveraged Bitcoin Futures ETF to be launched on Tuesday
  • More than half of Fortune 100 companies engage in crypto

Bitcoin touches year highs as major players make new waves in the crypto industry

This week witnessed significant milestones in the world of cryptocurrencies as industry heavyweights made headlines with groundbreaking initiatives. 

From the launch of a new platform supported by influential institutions to a significant investment bank seeking a crypto custodian license, the industry’s momentum caused a resurgence in Bitcoin’s price, which peaked at a new yearly high of $31,400. 

Starting on Tuesday 20th June, a promising new player emerged in the cryptocurrency industry, named EDX Markets. What sets this platform apart is its backing from prominent institutions, including Charles Schwab, Fidelity, and Citadel. 

Although some remain skeptical about the leader of the World Economic Forum’s involvement, the endorsement from such influential entities highlights the growing acceptance and credibility of cryptocurrencies.

According to Bloomberg, on the same day, Deutsche Bank paved a new way for crypto custody in Germany. The $1.4 trillion investment bank applied for a license to operate as a crypto custodian, signaling its recognition of the burgeoning potential within the crypto landscape. 

Then on Wednesday, the crypto community received an unexpected boost of confidence from an unlikely source—the Federal Reserve. 

During a semiannual hearing, Fed Chair Jerome Powell expressed his belief in the lasting impact of cryptocurrencies, particularly Bitcoin. Powell acknowledged the “staying power” of digital assets, and recognised stablecoins as a viable “form of money”. Both comments reflect a significant U-turn in the Fed’s stance on cryptocurrencies.

Finally, to round out the week, on Thursday, Valkyrie, a notable financial services firm, submitted an application for a Bitcoin Spot ETF – hot on the heels of BlackRock. 

Alongside the positive sentiment generated from another Bitcoin spot ETF filing, the ticker symbol for the ETF was what caught the industry’s attention. In a playful nod to the money printer meme associated with central banks, the ticker symbol for the ETF is “BRRR”.

With multiple institutions knocking on crypto’s door, Bitcoin recorded its third most bullish week in 2023, rising over 16% in 7 days. Other altcoins including Ethereum and Litecoin also faired well, rising 10% and 14% respectively. 

For the upcoming week, traders will be looking to see if bulls can continue to push the price of Bitcoin above the next zone of resistance which currently sits at $31,000.

BTC/USD weekly price chart
BTC/USD weekly price chart

First-ever leveraged Bitcoin Futures ETF to be launched on Tuesday

Adding to positive sentiment last week, the U.S. Securities and Exchange Commission (SEC) granted approval for the launch of the Volatility Shares 2x Bitcoin Strategy ETF on the Chicago Board Options (CBOE) BZX Exchange last Friday. 

The new ETF, with the ticker symbol, BITX, is set to launch on June 27th and will become the first leveraged Bitcoin futures exchange-traded fund. 

As per the SEC filing, the fund aims to provide investment results that correspond to twice the return of the Chicago Mercantile Exchange (CME) Bitcoin Futures Daily Roll Index.

ETFs, or exchange-traded funds, bundle securities such as stocks and commodities and, therefore, enable investors to gain exposure to these securities without direct ownership. Within this realm of financial products, there are two primary types of Bitcoin ETFs: Bitcoin futures and Bitcoin spot. 

Leveraged ETFs then take Bitcoin ETFs one step further and leverage debt or financial derivatives, specifically Bitcoin futures in this case, to amplify the returns of a benchmark index. While this leverage can potentially yield short-term gains, it also carries the risk of significant losses.

The approval of BITX has generally been applauded by cryptocurrency enthusiasts across the market and the subsequent positive sentiment has helped to maintain Bitcoin’s current position above $30,000. 

While it has also raised some questions including why a 2x leveraged futures product is launching before a straightforward spot ETF, positive sentiment regarding a new crypto ETF trickled over into all corners of the crypto markets, including ProShare’s existing Bitcoin futures ETF – BITO. 

As described by Senior Bloomberg Analyst, Eric Balchunas, the BITO ETF received the largest inflow of funds in over a year. 

Tweet by Eric Balchunas about Bitcoin Futures ETF
Tweet by Eric Balchunas about Bitcoin Futures ETF

The approval of BITX by the SEC brings a breath of fresh air to the digital asset industry, especially considering the recent legal action taken by the regulatory agency against two major cryptocurrency exchanges. 

Gary Gensler, the head of the SEC, has been a vocal critic of cryptocurrencies, making this approval all the more significant. While it is too early to determine whether this marks a turning point in the SEC’s relationship with crypto, the news undoubtedly provides encouragement for investors.

More than half of Fortune 100 companies engage in crypto

According to a new report published by a partnership between Coinbase and The Block Research team, the cryptocurrency industry’s reach extends far beyond the usual suspects of exchanges, DeFi projects, and trading firms. 

According to the study titled “The State of Crypto: Corporate Adoption,” over 50% of Fortune 100 companies have been actively involved in crypto projects since the beginning of 2020. What’s more, approximately 60% of these initiatives have either been launched or are in the pre-launch stage since the start of 2022.

The report, which analyzed Fortune 100 web3 activity and surveyed Fortune 500 executives, highlights that 52% of these prominent companies have invested in crypto or blockchain initiatives since 2020. 

Notably, as of Q2 2023, 70% of the companies with crypto projects had reached the publicly launched stage, marking the highest level since Q1 2020.

The report emphasized the motivations driving corporate interest in these technologies, stating, “These companies are innovating and investing in these technologies because they know that the century-old global financial system needs updating, that blockchain can be a foundational solution, and that not keeping pace will mean losing ground in this global economy to competitors around the world, among other possible reasons.”

However, the report also acknowledged the significant barriers to adoption, including regulatory uncertainty and the lack of clear rules for crypto and blockchain. 

An overwhelming 87% of surveyed executives emphasized the importance of clear rules to sustain the United States’ leadership in the global financial system. 

The report warned that if the US continues its current path of regulation by enforcement, it could risk losing 1 million web3 developer jobs and 3 million related non-technical jobs to other countries by 2030.

One key finding was that since 2017, Fortune 100 companies have invested in 109 private venture capital deals involving 80 crypto blockchain startups, contributing a staggering $8 billion to these funding rounds. 

Notably, Citi Ventures, Google Ventures, Microsoft Ventures, and Goldman Sachs have collectively made as many crypto private investments as all other Fortune 100 companies combined. 

Furthermore, Fortune 500 executives anticipate an average web3 initiative budget of nearly $5.8 million for 2023, indicating a considerable increase in investment in these technologies over the next two years.

A quarterly breakdown of crypto/web3 initiatives in Fortune 100 companies
A quarterly breakdown of crypto/web3 initiatives in Fortune 100 companies

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