Bitcoin and most other cryptoassets were unable to maintain their recent momentum despite a strong week for risk assets and more tailwinds for a potential spot Bitcoin ETF approval. On Tuesday, US consumer prices came in unchanged in October amid lower gasoline prices, and the annual 3.2% rise in inflation was the lowest in two years, suggesting that the Fed interest rate hiking cycle is likely to end. The unexpectedly low CPI reading led to a surge in equity and bond prices on Tuesday. Overall, the global fight against inflation increasingly appears to have turned a corner and lower CPI readings across developed markets could open the door for interest rate cuts next year, particularly in light of ongoing US consumer weakness. In other macroeconomic news, declining US spending indicates that the economy is slowing, with retail sales (-0.1% mom) falling for the first time since March. Lower US savings and rising credit card delinquencies along with Walmart’s concerns regarding consumer resilience beg the question whether there will be a “soft landing”.
Although the crypto rally took a breather this week, exchange traded fund (ETF) applications remained in the spotlight as additional details on the SEC’s ETF preferences regarding the specific mechanics are still being ironed out. On Friday, the SEC has directly advised all issuers that it would like the spot Bitcoin ETFs to use cash-create instead of in-kind redemption – one step closer to approval. On Thursday, BlackRock filed for a spot Ethereum ETF with the SEC in the footsteps of its current iShares spot Bitcoin ETF application. The Form S-1 comes a week after the world’s largest asset manager registered iShares Ethereum Trust entity with the Delaware Department of State Division of Corporations. One day later, asset management giant Fidelity also jumped aboard the ETH ETF train, filing for a spot ether ETF. In its filing, the firm states that “To this point, approval of a Spot ETH ETP would represent a major win for the protection of U.S. investors in the crypto asset space”. The filing noted the recent Grayscale court ruling where the court said the SEC had failed to find a coherent reason why it should reject spot crypto ETFs when it had allowed futures-based products.
Meanwhile, crypto asset manager Grayscale‘s GBTC’s discount vs. the fund’s net asset value decreased to -10.3% – a a level not seen since 2021. The jump was probably triggered by a post on X (formerly Twitter) by the firm’s CEO Michael Sonnenshein in which he wrote: “it’s been a ten-year dress rehearsal, we’re ready for the main event”. Nik Bhatia wrote in his weekly market commentary that his words could mean imminent approval of GBTC’s conversion into a spot ETF, potentially dragging all pending spot bitcoin ETF to approval as well. In a landmark decision for the crypto industry in August, the US District of Columbia Court of Appeals ruled that the SEC was wrong to reject an application from Grayscale Investments to convert its GBTC to a spot Bitcoin ETF.
Market Overview
The global cryptoasset market capitalization currently amounts to roughly $1.44 trillion – compared with $1.47 trillion last week, with bitcoin accounting for about 50%. Among the Top 30 cryptoassets by market cap, Kaspa (KAS) outperformed, gaining about 52% over the week. The price of bitcoin (BTC) fell by 1% to $36,730 while the price of ether (ETH) decreased by 5.4% to $1,956. The total value locked (TVL) in DeFi is sitting at roughly $45 billion, with Ethereum (excluding Layer 2s) currently accounting for about 54% of TVL.
This Week’s Headlines
- Cboe launches margined bitcoin and ether futures in January
- Fake filing for BlackRock XRP Trust triggers brief XRP price spike
- SEC delays decision over the conversion of the Hashdex Bitcoin futures ETF to a spot ETF
- Commerzbank scores crypto custody license in Germany
- Paxos to issue new USD-backed stablecoin in Singapore
- Aave rebrands to Avara, acquires software developer behind Ethereum wallet Family
- JPMorgan’s Onyx teams up with Apollo, WisdomTree, Avalanche, Axelar, and LayerZero on blockchain interoperability
- Standard Chartered unit launches tokenization platform Libeara
- Crypto fund inflows break $1 billion for 2023, led by BTC, ETH and SOL
- Memecoin of Elon Musk’s Grok surges over 1,000% nearly a week after its inception
- Disney and Dapper Labs launch Star Wars, Pixar “digital pin” platform
Notable Deals and Fundraising
- Blockchain.com raises $110 million in Series E funding
- Blockchain payments firm Fnality raises $95 million in round led by Goldman, BNP Paribas
- WonderFi subsidiary Bitbuy acquires crypto trading platform Bitvo
- Asset manager Superstate raises $14 million in a Series A round
- South Korean Web3 K-pop agency Modhaus raises $8 million in Series A round
- Bitcoin Ordinals startup Taproot Wizards raises $7.5 million in a seed round
- Sleek closes $5 million raise to launch tokenized knowledge marketplace
- Union Labs raises $4 million to develop cross-chain bridge enabled by ZK proofs
- Coinshares obtains right to purchase Valkyrie‘s ETF arm in bid to further US expansion
