Bitcoin’s historic moment

January 11, 2024

 

Reading time: 7 minutes

SEC greenlights all 11 spot Bitcoin ETF applications in landmark decision

Key points:

  • The landmark approval enables the first U.S.-regulated exchange-traded product, allowing investors direct exposure to Bitcoin's price without ownership or self-custody concerns, as they can purchase shares in ETFs holding Bitcoin as its underlying asset

  • U.S. Rep Patrick McHenry remarked that the decision represents a significant improvement over the SEC's history of relying on regulation through enforcement

News - On 10 January, the U.S. Securities and Exchange Commission (SEC)  approved applications for 11 spot Bitcoin ETFs. These include Blackrock, Valkyrie, Franklin, Bitwise, Fidelity, Hashdex, Ark Invest, Grayscale, WisdomTree, Van Eck, and Invesco Galaxy.

The filing was briefly accessible for download on the SEC website until an 'Error 404' message appeared. It subsequently became accessible through an alternate link.

10 years in the making? More than a decade after Cameron and Tyler Winklevoss initially applied to launch the Winklevoss Bitcoin Trust in 2013, the SEC's approval of Bitcoin ETFs marks a historic moment. Cameron Winklevoss celebrated the occasion, dubbing it "Bitcoin ETF Approval Day," noting that it was 3,845 days in the making in his post on X.

While there were several denials in the past due to concerns about market manipulation and fraud, SEC Chairman Gary Gensler hinted that Grayscale's legal victory in August 2023 had an impact on the approval decision. However, Gensler emphasized in his statement that the approval should not be interpreted as an endorsement or approval of Bitcoin by the SEC or himself.

Market buzz - While Bitcoin's price experienced a brief surge to $47,650 following the ETF approval, it had stabilized to $47,059 at press time, indicating a relatively muted impact on its overall value.

Moreover, while it is undoubtedly Bitcoin's day, attention also turned to Ether, with optimism for spot Ethereum ETF approvals, as Bloomberg's Eric Balchunas predicted a 70% chance of approval in May.

Whales boost ETH holdings, spurring price surge and network growth

Key points:

  • At press time, ETH was priced at $2,610, reflecting a 7.8% increase in the last 24 hours

  • During this period, network growth and velocity also saw a significant uptick, signaling increased interest from new addresses and a rise in token movements, contributing to a positive outlook for ETH's future

News - While the rest of the crypto market grapples with uncertainty, Ethereum has attracted significant attention from influential whales.

Whale in motion - Lookonchain's analysis highlighted a notable whale transaction on 9 January, involving the withdrawal of 9,705 ETH ($22.9M) from Binance [BNB], followed by the deposit of these funds into Compound (a DeFi protocol built on the Ethereum blockchain.)

Soon after, the whale borrowed 12 million Tether [USDT] to increase the ETH holdings. The trading activity involved three ETH transactions, two of which yielded profits, totaling approximately $5 million.

Assessing the implications - While the whale's moves led to a surge in Ethereum's price, they carry diverse implications for the crypto's future. On one hand, the substantial investment showcases confidence in ETH's future potential, boosting positive market sentiment. On the other hand, the increased profit-taking incentive introduces a risk factor that could potentially impact short-term price stability.

U.S. CFTC issues comprehensive report on tackling DeFi risks

Key points:

  • CFTC Commissioner Christy Goldsmith Romero, in a public statement, expressed hope that the report would initiate a conversation between policymakers and industry participants

  • This is due to the fact that DeFi remains a central concern for risks related to illicit finance, cyber hacks, and theft

News - The United States Commodity Futures Trading Commission (CFTC), responsible for overseeing U.S. derivatives markets, has issued a report providing recommendations to policymakers and industry participants on how to minimize risks related to decentralized finance (DeFi).

An overview - In its report, the CFTC's Digital Assets and Blockchain Technology Subcommittee acknowledged the "promising opportunities" within the DeFi space but also highlighted the complex and significant risks that DeFi poses to the U.S. financial system, consumers, and national security.

To this end, the CFTC suggested various measures to minimize DeFi risks, such as enhancing technical capabilities and understanding of DeFi, examining the current regulatory scope, identifying risks and vulnerabilities, and evaluating potential policy responses to address the identified risks effectively.

The report underscored the need for policymakers to determine the most suitable target and form of regulatory intervention. Additionally, the CFTC recommended that, when identifying targets for regulatory intervention, policymakers should assess where intervention is likely to incur the lowest costs and generate the fewest unintended consequences, striving for a balanced approach in weighing costs and benefits.

Turkish market's crypto framework nearing completion, reveals finance minister

Key points:

  • For some time now, Turkish authorities have been deliberating regulations for the crypto market, with a key focus on licensing and taxation to exit the FATF's "grey list"

  • As per Chainalysis, between July 2022 and June 2023, Turkey ranked fourth globally in raw cryptocurrency transaction volumes, totaling around $170 billion, trailing only the US, India, and the UK

News -  On 10 January, Turkish Minister of Treasury and Finance Mehmet Şimşek announced that the crypto framework for the Turkish market is now in the final stages of its development, with the technical aspects of its implementation currently being assessed. 

Şimşek also shared some details about  the upcoming regulations. 

What to expect - 

  • The regulations will provide legal definitions for terms such as "crypto assets," "crypto wallets," "crypto asset service providers," "crypto asset custody service," and "crypto asset buying and selling platforms."

  • They will require cryptocurrency platforms to acquire licenses issued by Turkey's Capital Markets Board (CMB).

  • Most importantly, they will comply with international standards, particularly the Financial Action Task Force (FATF) guidelines, in order to minimize risks in cryptocurrency trading for ordinary investors.

  • However, they will not address a specific tax structure for virtual assets.

Did you know?

  • The Bitcoin protocol was designed with a capped supply of 21 million coins. With 19.5 million currently in circulation, only a few million are left to be mined. This scarcity intensifies the significance and value of Bitcoin, contributing to the ongoing popularity of mining activities.

  • As of 2021, there were over 300 million crypto users globally. Cryptocurrency statistics from that year indicated Asia had the largest user base with 160 million, followed by Europe (38 million), Africa (32 million), and North America (28 million).

  • As per CoinATMRadar data, there are 34,479 crypto ATMs across 77 countries, managed by 603 operators. The United States dominates with 88% or 30,380 of these ATMs, while Canada (2,253) and El Salvador (205) follow as the second and third, respectively. 

Top 3 coins of the day

Ethereum Classic (ETC)

  • The altcoin gained momentum with the news of Bitcoin Spot ETF approval by the U.S. SEC 

  • The crypto's trading volume has increased by 250% in the last 24 hours, supporting the sharp jump in its price

What you should know - On 10 January ETC broke past the $25 resistance level, marking an end to its month-long rangebound movement. At press time, ETC was changing hands at $31.57, reflecting a 48.3% increase in its value over the past 24 hours. The Fear & Greed Index displayed a score of 64 (Greed), suggesting that investors were exhibiting high levels of optimism in the current market conditions. The MACD showed signs of a bullish crossover as green histograms were seen forming above the 0-level once again, suggesting strong bullish momentum supporting the continuation of the breakout rally.

Arbitrum (ARB)

  • ARB's trading volume recently surpassed $3.3 billion after rising approximately 3,000% in a month, according to data from CoinMarketCap

  • Data from DefiLlama revealed that Arbitrum’s TVL has been increasing over the last three months, rising more than 45% from $1.66 billion in October 2023 to the current value of $2.4 billion

What you should know - ARB began the year by breaking past its previous all-time high resistance at $1.70, validating it as support. Since then, the crypto surged by 60%, reaching a new all-time high of $2.42 on 11 January. At press time, ARB was priced at 2.32, with a 19.2% hike over the last 24 hours. The hike was reflected by the On Balance Volume as it stood in bullish territory. 

Ripple (XRP)

  • On 10 January, several news agencies reported that Ripple Labs will be buying back $285 million worth of shares in the company from early investors and employees

  • At its press time price, XRP was still down 81.80% from its all-time high of $3.40 set on 7 January 2018

What you should know -  XRP has traded in a range of $0.5451 to $0.6145 in the past 7 days. At press time XRP was trading at $0.6179, after gaining by 11.8% in the last 24 hours. The RSI was seen moving steadily above the 50-mark, implying that average gains surpassed average losses over the past week. The $0.70 psychological level could act as a potential resistance zone in XRP's upward momentum. 

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