The cryptocurrency market is witnessing unprecedented milestones as Bitcoin surges past $48,000, fueled by the record-breaking performance of newly introduced ETFs.
In a groundbreaking month for Bitcoin ETFs, BlackRock’s IBIT and Fidelity’s FBTC have rewritten the history books, amassing over $3 billion in assets within their first 17 trading days.
Meanwhile, regulatory attention turns to Ethereum as ARK 21Shares unveils plans to integrate Ethereum staking into its proposed spot Ether ETF.
As the industry juggles with these developments, attention also shifts to MicroStrategy’s aggressive Bitcoin acquisitions and the SEC’s deliberations on Ethereum ETF approvals.
We have a big week ahead, so let’s dive in.
Bitcoin Breaks $48K as ETFs break records
As the debut month of Bitcoin ETFs closes, weekly inflows for ETF products has continued to rise which is viewed as a key contributing factor to why Bitcoin is above $48,000 for the second time in 2024.
In particular, BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) have rewritten the record books with the most successful debut month of any ETF in the past three decades.
According to recent data from Bloomberg Intelligence, the two Bitcoin exchange-traded funds have surged past $3 billion in assets within their first 17 trading days, surpassing the achievements of over 5,500 ETFs launched in the United States over the last 30 years.
Eric Balchunas, an ETF analyst at Bloomberg, hailed IBIT and FBTC as outliers in their own league, highlighting their unprecedented success in accumulating assets since their inception.
Before the emergence of spot Bitcoin ETFs, the title for the most assets under management in the debut month belonged to BlackRock’s iShares Climate Conscious & Transition MSCI USA ETF, launched in June 2023, with $2.2 billion.
However, the performance of IBIT and FBTC has surpassed all expectations, setting a new standard in the ETF market.
Unlike many other ETFs that relied on a single investor for their assets, BlackRock and Fidelity’s Bitcoin ETFs have consistently attracted inflows from a diverse range of investors since their launch – a phenomenon described by Balchunas as “literally unprecedented.”
Among the top 25 ETFs by assets under management after the first month of trading, ARK 21Shares’s spot Bitcoin ETF and Bitwise Bitcoin Fund also secured 20th and 22nd positions, respectively.
ProShares Bitcoin Strategy ETF, launched as a futures product in October 2021, also made a notable appearance, ranking seventh.
Eyes turn to July for final Ethereum ETF decision
The SEC has opted for yet another postponement in its decision-making process regarding the proposed Ethereum ETF.
This latest development affects the application submitted by investment titans Invesco and Galaxy Digital, who had intended to introduce the Invesco Galaxy Ethereum ETF on the Cboe BZX Exchange.
As per a notice issued on Feb. 6, the SEC has disclosed its intention to solicit public feedback, thereby elongating the evaluation window by an additional 35 days from the publication date in the Federal Register.
With the potential to extend the final verdict up to 240 days from the filing in October 2023, the ultimate decision deadline now looms as far as July 2024 for the SEC.
James Seyffart, an ETF analyst at Bloomberg, shared his insights on the delay via the social media platform X, indicating that it was entirely anticipated.
He further forecasted additional deferments in the forthcoming months, underscoring May 23 as a pivotal date.
This date marks the deadline for a verdict on Vaneck’s Ethereum ETF application, potentially signaling the SEC’s stance on analogous products.
Analysts, including those from British banking giant Standard Chartered, harbor optimism regarding the potential approval of an Ethereum ETF by May.
They cite the SEC’s reticence on categorizing ETH as a security as a favorable indicator.
The absence of a security designation for ETH could potentially pave the way for ETF approvals, considering the SEC’s track record of clamping down on crypto firms for distributing unregulated securities.
MicroStrategy brings holdings to 190,000 BTC
MicroStrategy, the leading business publically advocating for Bitcoin adoption, has bolstered its cryptocurrency reserves once again by acquiring an additional $37 million worth of Bitcoin in January.
This acquisition brings the company’s total Bitcoin holdings to a staggering 190,000 BTC, valued at approximately $8.1 billion.
During the fourth-quarter earnings call held on February 6, MicroStrategy’s chief financial officer, Andrew Kang, revealed that the company had procured 850 BTC in January alone.
In a statement, Kang highlighted the company’s aggressive accumulation of Bitcoin throughout 2023, totaling 56,650 BTC at an average price of $33,580.
Despite a slight decrease in revenue, MicroStrategy reported a net income of $89.1 million, marking a significant turnaround from the previous year’s loss of $249.7 million.
MicroStrategy’s executive chairman, Michael Saylor, attributed the company’s success to the growing recognition of Bitcoin as an institutional-grade asset.
Saylor emphasized that 2024 heralds the emergence of Bitcoin as a mainstream investment vehicle, marking a pivotal moment in the digital asset’s evolution.
Saylor expressed optimism about the future of Bitcoin, envisioning a regulated and institutionalized landscape that fosters exponential growth. He dismissed criticisms of Bitcoin’s utility as a currency, asserting its role as a superior store of value.
Saylor’s bullish stance on Bitcoin’s potential for further appreciation resonated with investors, driving MicroStrategy’s stock price to new heights.
In a bold declaration, Saylor announced MicroStrategy’s intention to continue accumulating Bitcoin, underscoring the company’s unwavering confidence in the digital asset’s long-term viability.
Ark Invest seeks to stake Ethereum
ARK 21Shares has announced significant amendments to its application for a spot Ether ETF, diverging from its initial proposal and seeking to implement a cash-creation model akin to its successful Bitcoin ETF.
Importantly, the firm has also unveiled plans to integrate Ethereum staking into the ETF framework, a move aimed at generating additional income.
In a strategic shift, ARK 21Shares, alongside BlackRock, has revised its ETF application to adopt a cash-creation model, aligning with the structure of approved Bitcoin ETFs.
This adjustment, highlighted in the latest Form S-1 amendment filed on Feb. 7, represents a departure from the previously proposed in-kind redemption model.
Under the proposed cash-creates model, ARK 21Shares intends to purchase Ether equivalent to the order amount and deposit it into the trust’s account with the custodian, facilitating the creation of ETF shares.
This modification brings the Ether ETF more in line with established Bitcoin ETFs, according to Bloomberg ETF analyst Eric Balchunas.
However, the introduction of Ether staking within the ETF framework has raised eyebrows.
In its S-1 filing, ARK 21Shares outlined plans to stake a portion of the Trust’s assets through third-party staking providers, expecting to receive staking rewards as income.
Despite the proposal’s ambition, regulatory approval remains uncertain.
Analysts, including Bloomberg’s James Seyffart, express skepticism, with Seyffart lowering the odds of spot Ether ETF approval from 70% to 60%.
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