The cryptoasset market continues to remain range-bound despite a slew of positive news recently, with investors likely waiting on the sidelines until they have more global macro and regulatory clarity. The lack of price action cannot belie the fact that recent bullish headlines in Bitcoin, Ethereum, Solana and stablecoins look set to bode well for the sector. In traditional financial markets, broader concerns about the global economy and doubts surrounding a soft landing – lower inflation without a recession – weighed on equities this week. Major US stock indices ended the weak lower across the board while the tech-heavy Nasdaq (+39.5% YTD) continues to lead other indices such as the S&P (+17.4% YTD) and the Dow Jones (+4.3% YTD) in terms of year-to-date performance. In regulatory news, the FASB voted to set a highly favorable new rule on cryptocurrency accounting and disclosure, which will benefit companies holding Bitcoin and other cryptoassets in that it more accurately reflects their financial condition. In other news, Visa expanded its USDC stablecoin settlement capabilities to Solana, forming partnerships with Worldpay and Nuvei for pilot programs.
On Wednesday, the Financial Accounting Standards Board (FASB), which sets accounting standards for US companies and nonprofits, voted to adopt a new standard that would require businesses to use fair-value accounting for bitcoin and other cryptoassets. Accounting firms and corporations that hold BTC and other cryptoassets on their balance sheets have repeatedly argued in support for this change, as it would allow them to realized gains and losses instantly. The rule allows companies to treat digital assets similar to some financial assets as opposed to indefinite-lived intangible assets. The highly beneficial change permits companies to to mark their Bitcoin at “fair value” whereas previously Bitcoin’s value on the books had to be marked down to the lowest price it reached since its acquisition. This rule and its clarity around fair value accounting could be an important step toward incentivizing more large, publicly traded companies to follow in the footsteps of MicroStrategy. The company’s executive chairman Michael Saylor said that the rule update “eliminates a major impediment to corporate adoption of bitcoin as a treasury asset.”
Despite the SEC’s recent delay in making decisions regarding several Bitcoin ETFs, the overall sentiment remains bullish for Bitcoin despite its sideways trend in August. For example, there has been a notable decrease in the amount of BTC held on centralized exchanges (CEXs), dropping by 4.1% in August. This decline could be interpreted as a sign of increased long-term investor confidence in the Bitcoin. CEXs held the lowest reserve of BTC since January 2018, with a decrease of 86,305 BTC from the beginning to the end of August. Meanwhile, the SEC’s decision to postpone until mid-October the approvals for seven spot Bitcoin ETFs, proposed by prominent firms like BlackRock, Fidelity, and VanEck, is not a setback but had been widely expected. Former SEC chairman Jay Clayton expressed his belief that approval of spot Bitcoin ETFs is “inevitable.” He stated that “it is clear that bitcoin is not a security. It is clear that bitcoin is something that retail investors want access to, institutional investors want access to, and, importantly, some of our most trusted providers who are fiduciaries or have duties of best interest want to provide this product to the retail public.
JPMorgan analysts share Clayton’s perspective, suggesting in a recent investor note that the SEC will likely have no choice but to approve multiple spot Bitcoin ETF applications. This expectation is partly based on Grayscale’s recent victory in its case against the SEC. The crypto asset manager’s win implies that the SEC would need to retract its previous approval of futures-based Bitcoin ETFs to maintain its denial of Grayscale’s proposal to convert its Bitcoin Trust (GBTC) into an ETF. Such a move would be disruptive and embarrassing for the SEC, making it less likely to occur.
Market Overview
The global cryptoasset market capitalization currently amounts to $1.08 trillion – little changed from one week ago, with bitcoin accounting for 46.5%. Among the Top 30 cryptoassets by market cap, Stellar (XLM) outperformed, gaining 15.5% over the week. The price of bitcoin (BTC) rose slightly by 0.3% to $25,852 and the price of ether (ETH) fell moderately by 0.3% to $1,632. The total value locked (TVL) in DeFi is sitting at roughly $37.9 billion, with Ethereum (excluding Layer 2s) currently accounting for about 56.5% of TVL.
This Week’s Headlines
- Visa expands stablecoin settlement options to Solana, forms partnerships with Worldpay and Nuvei
- Cambridge updates Bitcoin mining index to reveal previous power estimates were greatly overestimated
- Genesis to shutter crypto trading desk for US market this month
- Circle recommends tweaks to EU regulator‘s proposed crypto guidelines
- Circle deploys USDC on Layer 2 networks OP Mainnet and Base
- Coinbase increases bond buyback program to $180 million
- MetaMask adds off-ramp function allowing users to sell crypto for fiat
- MakerDAO announces final phase of its “Endgame”, highlights Solana codebase for new native blockchain
- DYDX token approved to become native asset of upcoming dYdX Chain
- Crypto casino Stake targeted in reported $40 million exploit
Notable Deals and Fundraising
- Robinhood buys back former Sam Bankman-Fried stake for $606 million
- Ripple acquires blockchain infrastructure firm Fortress Trust in cash-and-equity deal
- B2C2 eyes European expansion with acquisition of rival trading firm Woorton
- Coinbase raises $57 million to create new crypto lending service geared toward large investors
- Open-source IP platform Story Protocol raises $54 million in a funding round led by a16z crypto
- Web3 interoperability domain name startup D3 Global raises $5 million in a seed round
- Web3 marketing firm DeForm raises $4.6 million in seed funding
- Stroom Network raises $3.5 million to launch Bitcoin “liquid staking” on Lightning
- Singapore-based Helix raises $2 million to connect crypto investors with private credit yields
- HashKey Capital forms liquid fund with heavy altcoin focus, Reuters reports
- Argent and Starknet partner to launch new venture studio Hito Studios
- Crypto VC funding falls for fourth consecutive month, hits 30-month low
