As we approach the last weeks of the year, the positive trend in cryptoassets, driven by the anticipation of a Bitcoin ETF, continues to remain strong. There is now evidence to suggest that an approval will happen in early January (see also below). Bitcoin has continued to show strength as BTC hit a new year-to-date high on Friday. In addition, risk assets have benefited from a broad-based decline in Treasury yields across the curve in recent weeks, with bond futures pricing in a first rate cut in the first half of 2024. US equities locked in their best month of the year on Thursday (Dow Jones +8.8%, Nasdaq +10.7%), ending a three-month decline across major indexes. The benchmark S&P 500 index gained 9% in November and is now within striking distance of its all-time high amid significant price gains from the likes of Apple and Microsoft. Publicly-listed firms with crypto exposure such as MicroStrategy and Bitcoin miners also had a strong week. Meanwhile, disinflation in the US continues as the Fed’s favorite inflation metric increased slightly by 0.2% last month and 3.5% year-on-year. Lower inflation combined with a slew of deteriorating macroeconomic indicators point toward a more likely pivot in Fed policy next year.
Although the SEC delayed its decision on both the Franklin Bitcoin ETF and the Hashdex Bitcoin ETF this week (well ahead of their deadlines on January 1st), indications suggest that the resolution surrounding a spot Bitcoin ETF is imminent. The window and likely final decision date for a US spot Bitcoin ETF approval is now emerging: January 5th to January 10th. Bloomberg analyst and leading Bitcoin ETF expert James Seyffart posted on X: “Window is officially Jan 5th to Jan 10th. Really this means that any potential approval orders are going to come on either Monday Jan 8, Tuesday Jan 9, or Wednesday Jan 10. Mark your calendars people.”
During the past week, there has been a notable increase in the level of behind-the-scenes activities related to spot Bitcoin ETF applications. The SEC is actively engaged in discussions with various issuers, particularly regarding the mechanics of their ETFs and details outlined in their application forms. A key point of contention revolves around the share create and redeem function, with most issuers including an “in-kind” methodology. Notably, the Franklin Bitcoin ETF recently updated its prospectus to include a “cash” methodology alongside its existing in-kind approach. Additionally, Blackrock proposed an updated in-kind redemption methodology for the iShares Bitcoin Trust, possibly in response to feedback from SEC staff. Grayscale also introduced an additional “cash” methodology recently. The crypto asset manager also added former Invesco ETF lead John Hoffman who previously led Invesco’s Americas ETF division to its team.
As the year-end approaches, the crypto bullish trend driven by spot Bitcoin ETF expectations also benefits crypto products and funds. Inflows at asset managers such as 21Shares, CoinShares, Bitwise, Grayscale and ProShares added $346 million last week, the largest jump since the bull market of late 2021, according to a recent report by CoinShares. Bitcoin products experienced inflows to the tune of $312 million last week, bringing year-to-date inflows to just over US$1.5 billion. Moreover, the combination of cryptoasset price increases and inflows pushed total assets under management at the above-mentioned firms to over $45 billion — the highest in more than 18 months. To put this in context, four out of the past five weeks accounted for the largest weeks of inflows in 2023. Crypto asset managers have now registered 9 consecutive weeks of inflows after they experienced net weekly outflows for most weeks in July, August and early September.
Market Overview
The global cryptoasset market capitalization currently amounts to roughly $1.52 trillion – compared with $1.49 trillion last week, with bitcoin accounting for about 49.5%. Among the Top 30 cryptoassets by market cap, Dogecoin (DOGE) outperformed, gaining about 7.3% over the week. The price of bitcoin (BTC) rose by 2.7% to $38,780 while the price of ether (ETH) increased by 1.2% to $2,102. The total value locked (TVL) in DeFi is sitting at roughly $48 billion, with Ethereum (excluding Layer 2s) currently accounting for about 56% of TVL.
This Week’s Headlines
- SEC asks public for feedback on proposed spot bitcoin ETFs from Franklin Templeton, Hashdex
- MicroStrategy purchases an additional 16,130 BTC for $593.3 million
- Bitcoin long futures open interest held by asset managers hits all-time high
- Circle seeks to expand USDC presence in Japan with SBI Holdings
- Binance founder CZ ordered to stay in US for now
- Binance to end support of BUSD stablecoin in December
- KyberSwap hacker demands full control over Kyber in on-chain message
- November saw $343 million lost to crypto hacks and fraud cases, according to Web3 bug bounty platform Immunefi
- Cristiano Ronaldo sued for $1 billion over Binance NFT promotion
Notable Deals and Fundraising
- Digital asset platform Coinchange raises $10 million in a Series B round with participation from Spirit Blockchain and others
- Cross-chain protocol Wormhole closes $225 million funding round at $2.5 billion valuation
- Decentralized Infrastructure Provider Grove raises $7.9 million
- Mummolin raises $6.2 million in a seed funding round led by Jack Dorsey to build out its decentralized Bitcoin mining pool OCEAN
- Asia-based crypto derivatives protocol MYX raises $5 million in a seed round
- Web3 consumer app Setter raises $5 million in a seed round led by a16z
- Animoca Brands invests in TON Network, becomes largest validator
