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Bitcoin’s Rollercoaster Ride: Recovery Attempts and SEC Speculations

by Ouess
written by Ouess

Bitcoin had a tough time bouncing back after a massive drop earlier in the week, sinking nearly 9.22%. By Thursday morning in London, it hadn’t moved much, hovering around $43,056. While it showed some recovery from Wednesday’s low, it still sat about 6.2% below its peak for the year.

Just before January 2, Bitcoin had surged to a high not seen in almost two years. This surge happened right before an important January 10 deadline, which could potentially greenlight the very first exchange-traded fund linked directly to Bitcoin’s actual value.

However, things took a drastic turn as Bitcoin, alongside the broader crypto market, took a sudden nosedive on Wednesday. Some pointed fingers at Matrixport analyst Markus Thielen, suggesting that his prediction of the SEC rejecting all Bitcoin ETF proposals this month might have triggered the crash.

This plummet caused over $600 million worth of cryptocurrency positions on major exchanges to be liquidated, making it the largest liquidation since December 11, according to Coinglass data.

Addressing the uproar caused by the report, Jihan Wu, founder of Matrixport, took to X, previously known as Twitter, expressing disbelief that a single report from Matrixport could shake a trillion-dollar market.

Wu further added in another post that despite the current uncertainty surrounding the potential approval of a Bitcoin ETF in January 2024, it holds no real significance when considering Bitcoin’s history and its future prospects.

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Story

Bitcoin’s Flash Crash and Crypto Turbulence: Market Insights and SEC Speculations

by Ouess
written by Ouess

Wednesday morning brought an unexpected turn for Bitcoin (BTC) as its value plummeted in a matter of minutes. Starting around $45,132, Bitcoin’s price nosedived to as low as $40,750, wiping out gains accrued over the previous week.

Reports from CoinMarketCap revealed a staggering 9.5% drop in Bitcoin’s value during this abrupt flash crash. The fallout led to liquidations exceeding $595 million in crypto long positions within 24 hours, with Bitcoin longs accounting for $137 million in the past hour alone, according to CoinGlass data.

The impact wasn’t limited to Bitcoin—other cryptocurrencies followed suit. Ethereum (ETH) faced a sharp 10.9% decline, and Solana (SOL) witnessed a staggering crash of over 20% during this sudden market turbulence. However, both Bitcoin and alternative cryptocurrencies have since rebounded from their lowest points.

Markus Thielen, Matrixport’s Head of Research, presented a conflicting view regarding spot Bitcoin ETFs in a client-focused research note released on January 3. This contradicted an earlier stance on January 2 that anticipated potential approvals for these ETFs. Thielen’s note suggested the SEC would likely reject spot Bitcoin ETF applications this January.

This plunge arrives amid the crypto community’s anticipation of the SEC’s decision regarding multiple spot Bitcoin ETF applications. Some analysts speculate that the market reaction might trigger a “sell-the-news” scenario. However, the exact reasons behind this sudden market downturn remain unclear. It could be linked to profit-taking before the SEC’s decision, uncertainties prevailing in broader financial markets, or a combination of various factors.

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Press Release

Jihan Wu Clarifies Matrixport’s Stance on Bitcoin ETF Report Amid Market Turbulence

by Ouess
written by Ouess

Jihan Wu, the mind behind Bitcoin mining company Bitdeer and financial services firm Matrixport, made it clear that his company didn’t plan or control the spread of a report suggesting Bitcoin exchange-traded funds (ETFs) might face rejection in January. He stressed that this report’s circulation wasn’t orchestrated by Matrixport.

When Bitcoin’s value took a sudden 10% dip to $40,800 on January 3, it aligned with Matrixport releasing a report for its clients. The report predicted that proposals for spot Bitcoin ETFs, usually expected for regulatory approval, would likely get turned down by the United States Securities and Exchange Commission (SEC) this January. This conclusion was drawn from the SEC’s current Commissioners, mainly Democrats, and Chair Gary Gensler’s perceived cautious stance on crypto in the U.S.

To address the market frenzy, Wu clarified that the analysts at Matrixport work independently and are hired for their top-notch analytical skills. He emphasized that the report was intended solely for clients and wasn’t meant to spread widely through the media as it did.

Wu pointed out that Bitcoin’s price movement wasn’t directly caused by the report. Instead, he attributed the volatility to the high funding fees in the perpetual market and the recent decline in crypto-related stocks in the stock market over the previous two trading days.

Regarding the uncertainty around the spot Bitcoin ETF’s potential approval, Wu remained unfazed, believing its eventual approval is inevitable despite the current market fluctuations and hesitancy.

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Regulation

Citi Introducing Bitcoin Depositary Receipts: Direct Ownership for Institutional Investors

by Ouess
written by Ouess

A new service, named Bitcoin depositary receipts, is set to launch. These receipts function much like American depositary receipts, which stand for foreign stocks. The company behind this, Receipts Depositary Corporation (RDC), intends to provide the initial Bitcoin depositary receipts to qualified global institutional investors without needing registration under the Securities Act of 1933.

Dubbed BTC DRs, this service grants institutions access to Bitcoin securities through a regulated US market system and cleared via the Depository Trust Co. Essentially, RDC acts as a tool for asset owners—be it hedge funds, family offices, or large investors—who wish to convert their Bitcoin into a DTC-eligible security for direct ownership within US clearances.

Ankit Mehta, RDC’s co-founder and CEO, mentioned that their aim is to facilitate the conversion of Bitcoin into a DTC-eligible security, enabling direct ownership for various institutional entities. The company’s transfer agent will be Broadridge Corporate Issuer Solutions, while custody of the underlying Bitcoin will be handled by Anchorage Digital Bank National Association. Investors such as Franklin Templeton, BTIG, and Broadhaven Ventures are among those backing RDC, according to their press release.

The value of Bitcoin recently surged above $45,000, hinting at growing optimism about the potential approval of exchange-traded funds directly investing in Bitcoin by the US Securities and Exchange Commission. Mehta believes that RDC’s offering will complement Bitcoin ETFs rather than compete with them. Having previously worked in depositary-receipt teams at Citigroup, Mehta and his co-founders bring expertise to RDC.

Unlike Bitcoin ETFs redeemable for cash, depositary receipts provide qualified institutions direct ownership of Bitcoin. For regulated institutions, direct Bitcoin purchase isn’t the favored choice due to challenges in crypto markets like security risks and regulatory uncertainties. These challenges resemble those faced by Americans investing in foreign companies, which were tackled by American depositary receipts.

Ishaan Narain, one of the co-founders, highlighted the time taken for market-infrastructure issues to evolve in the digital-asset sphere, prompting RDC to partner with service providers meeting institutional demands.

Bitcoin was designed to eliminate centralized clearinghouses using decentralized blockchain technology. However, RDC founders believe that institutions will find comfort in Bitcoin depositary receipts, aligning with traditional market standards.

Diogo Mónica, co-founder of Anchorage Digital, anticipates that 2024 will witness a convergence of traditional finance standards, like depositary receipts, into the digital-asset landscape, benefiting institutions cautious due to regulatory uncertainty.

Although Citigroup had earlier explored a similar product in 2018, the three RDC co-founders were part of that initiative. However, Mehta clarified that RDC’s offering is distinct from Citigroup’s exploration into depositary receipts for various asset classes.

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Bitcoin

Bitcoin’s Scarcity Challenge: Implications Amidst Growing Interest

by Ouess
written by Ouess

Bitcoin, with its fixed supply of 21 million units, faces a potential scarcity issue, especially if more of the world’s 60 million dollar millionaires seek greater involvement. It’s estimated that a substantial portion of Bitcoin is irretrievably lost, intensifying this scarcity.

An investigation by Henley & Partners last September indicated the potential presence of 40,500 individuals whose wealth surpasses a million dollars, held in Bitcoin.

“We’ve observed a surge in interest from crypto millionaires in the past half-year. They’re all seeking to establish a solid ‘Plan B’ to safeguard against potential bans on crypto trading or usage in their countries. Additionally, they aim to mitigate risks linked to taxing digital assets directly,” explained CEO Dr. Juerg Steffen to WealthBriefing, a private banking news service.

Henley’s report indicated only six Bitcoin billionaires as of September.

Simultaneously, Glassnode data reveals that the count of “wholecoiners” (unique addresses owning at least 1 BTC) has crossed the 1 million mark for the first time.

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Story

Goldman Sachs Eyes Role in Bitcoin ETFs: Regulatory Push Intensifies

by Ouess
written by Ouess

According to CoinDesk’s report on Wednesday, Goldman Sachs is reportedly discussing becoming an authorized participant for spot bitcoin exchange-traded funds (ETFs) planned by BlackRock and Grayscale. These ETFs aim to track the actual market price of Bitcoin, allowing investors exposure to the asset without directly purchasing it.

Currently, 14 asset managers are seeking approval from the U.S. Securities and Exchange Commission (SEC) for spot bitcoin ETFs. These funds would mirror the value of the cryptocurrency itself. The SEC is expected to reveal its decision by January 10, which is the deadline for approving or rejecting the Ark/21Shares ETF. So far, approved crypto ETFs have been linked to futures contracts of bitcoin and ethereum.

Goldman Sachs and BlackRock declined to comment, and there was no immediate response from Grayscale when Reuters requested a comment.

In the past ten years, the SEC has turned down numerous attempts to introduce these products, citing concerns about potential market manipulation and a lack of safeguards for investors.

An authorized participant holds the authority to generate or redeem an ETF’s shares and ensures the fund accurately mirrors the underlying asset’s value.

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Bitcoin

Spot Bitcoin ETF Showdown: Issuers Gear Up for Regulatory Decision

by Ouess
written by Ouess

As the deadline looms for the U.S. Securities and Exchange Commission to greenlight or reject the groundbreaking spot bitcoin ETF, companies are wrapping up their regulatory paperwork, fine-tuning their filings after multiple rounds of edits.

According to Reuters, the SEC informed issuers—based on confidential sources—that December 29th marked the final opportunity to tweak their spot bitcoin S-1 applications for ETFs. Heavyweights like BlackRock, Invesco, Ark, Grayscale, and others seized the chance, filing amendments on that Friday. Notably, Fidelity and WisdomTree named Jane Street as the fund’s broker dealer, while Invesco designated JPMorgan and Virtu as their authorized participants.

Those who submitted fresh ETF amendments on December 29th stand a good chance of being among the first wave of launches, potentially gaining significant advantages as early movers in this novel product space.

Despite a decade-long competition among issuers to introduce a spot bitcoin ETF, the SEC only recently started collaborating seriously with companies to push filings toward approval. This shift came after Grayscale secured a landmark victory against the SEC in late August, when a U.S. appeals court ruled against the regulator’s obstruction of the conversion of Grayscale Bitcoin Trust (GBTC) into an ETF.

This legal decision essentially forced the SEC’s hand and cleared the way for the arrival of ETFs linked to physically backed bitcoin.

The Race for Spot Bitcoin ETF Bitwise Asset Management, along with Wall Street giants like BlackRock, is striving to attract crypto investors, sparking an unprecedented marketing battle over ETFs.

Bitwise took the lead by launching their quirky “Most Interesting Man” commercial earlier this month. Hashdex and VanEck have also joined the fray with their own TV ads.

“It’s all about marketing now, some might even say it’s a battle,” remarked Cathie Wood, head of ARK, to etf.com in November.

Competition will also hinge on fees. Invesco, for instance, plans to waive the fund’s fee for the first six months and beyond reaching $5 billion in assets. Fidelity currently boasts the lowest listed fee at 0.39%, but not all issuers have disclosed their fee structures in their filings.

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Bitcoin

Bitcoin’s Wild Ride: Volatility Strikes, Erasing Year’s Gains

by Ouess
written by Ouess

Bitcoin took a hit on Wednesday, wiping out all its gains for the year and ending a streak of success that had surpassed the struggles of traditional assets worldwide.

The largest cryptocurrency dropped by as much as 9.2%, sliding below $41,000 after reaching a 21-month high of over $45,000 just a day earlier. This volatility also affected stocks connected to crypto, with Coinbase Global Inc. seeing a 6.7% decline.

BTC USD 30min chart Source : TradingView

Fadi Aboualfa, head of research at Copper Technologies Ltd., commented on the situation, anticipating heightened instability as markets assess risks across various asset classes this year. He noted similarities to the market dip experienced in early December, which was followed by a significant rebound.

Bitcoin’s recent surge anticipates a critical January 10th deadline involving a potential approval by the US Securities and Exchange Commission (SEC) for the first-ever exchange-traded fund linked directly to Bitcoin’s spot price. Despite Bitcoin’s remarkable 160% surge in 2023, Matrixport analyst Markus Thielen expressed skepticism, suggesting that the SEC will reject all Bitcoin ETF proposals this month. Thielen highlighted that the recent applications might not meet the SEC’s stringent requirements necessary for approval.

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Bitcoin

Bitcoin’s Volatile Plunge: Market Turmoil Amid ETF Forecasts

by Ouess
written by Ouess


Bitcoin’s rollercoaster ride saw it nosedive to $40,700 from a high of $45,600, based on CoinMarketCap data. On its 15th ‘Genesis’ anniversary, the pioneer cryptocurrency suffered abrupt and substantial outflows, wiping away much of its gains from the past month.

In a rapid descent, Bitcoin slipped under $42,000 on January 3, shedding around $3,000 within a mere two hours, per CoinGecko figures. The intraday plunge bottomed out at $40,700 after peaking earlier at $45,600, according to CoinMarketCap.

Currently, Bitcoin stands at $42,608, marking a nearly 6% decline in the last 24 hours, as per CoinGecko. Over the last 14 days, it’s down by 1.5%, with almost no positive momentum in the last month.

This sharp downturn coincided with Matrixport retracting its earlier prediction regarding the potential approval of the first spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) in January 2024.

Initially, Matrixport anticipated Bitcoin hitting $50,000, buoyed by an anticipated “imminent Bitcoin spot ETF approval.” The firm suggested this approval might even arrive before traders’ expected dates of January 8, 9, or 10.

However, the very next day, Matrixport reversed its forecast, now claiming that the SEC would reject all Bitcoin spot ETFs in January, and these approvals might not materialize until the second quarter of the year.

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SEC’s Pending Decision: Assessing the Fate of the Spot Bitcoin ETF

by Ouess
written by Ouess

Bloomberg’s ETF analyst Eric Balchunas suggests that while it’s improbable, there’s still a slight chance the SEC might deliver what he calls the “biggest shock in a decade.”

Even though the odds are low, Balchunas points out that a potential rejection of a spot Bitcoin exchange-traded fund (ETF) this month by the Securities and Exchange Commission would likely be more about the regulator seeking “additional time” rather than an outright refusal.

Balchunas and fellow ETF analyst James Seyffart maintain a 90% likelihood of approval by January 10. However, they haven’t increased the odds due to this concern.

“We’re cautious because if we don’t witness it in the next fortnight, it’s more about needing more time.”

Balchunas emphasizes that the 10% chance includes various potential outcomes, stating, “I don’t foresee an outright denial.”

Despite this, he highlights the significant effort both the SEC and Bitcoin ETF issuers have invested, making a last-minute rejection seem highly unlikely.

“This would be an unprecedented move. Everyone has put in immense effort, especially during the holidays. ‘Sadistic’ might not even capture the severity of it.”

While crypto research firm K33 Research’s analyst Vetle Lunde echoes Balchunas’ sentiment, placing the probability of an ETF rejection at a mere 5% in a January 2 market report.

Balchunas speculates that if the SEC were to outright reject the ETF, fund issuers might take a page from Grayscale’s book and initiate legal action against the regulator.

“People have invested too much time and money to back down now. It wouldn’t just end there. I doubt there would even be a cooling-off period this time. It would be chaos.”

Meanwhile, public comments continue pouring in for the SEC’s review of the filings. Recent submissions as of January 2 have explicitly urged the rejection of the ETFs, citing concerns about Bitcoin’s decentralized nature and its appeal to authoritarian regimes seeking to evade sanctions and control citizens through unconventional financial means.

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