23 June 2023

Hello,

What a turnaround! Bitcoin has surged 15% on the weekly and is trading around $30,000. Key altcoins have also gained but not as much as BTC – this also implies that BTC dominance is on the rise (~50%). It feels like the swift action by US SEC to penalize players in the sector earlier this month are but a mere memory.

A spate of announcements by key institutions seem to have contributed to this optimism in the market. From BlackRock filing for an exchange-traded fund (ETF) to Binance announcing a new Layer-2 solution, we cover all the things that drove this rally in the Hot Take today. Does this mean we are back in a sustained bull run? We have an answer for this too.

Top-3 stories of the week:

Valkyrie Joins in on Spot Bitcoin ETF Race.

Valkyrie Funds, a Tennessee-based asset manager, has recently joined a growing list of firms seeking approval from the U.S

. Securities and Exchange Commission (SEC) for a spot Bitcoin exchange-traded fund (ETF). The company already offers a Bitcoin futures ETF, a defi fund, and a Bitcoin mining industry ETF.

2

BNB Chain has launched a new layer-2 network called opBNB on testnet

. The network is based on Optimism’s OP Stack and uses optimistic rollups to scale transactions and lower fees. opBNB is compatible with the Ethereum Virtual Machine (EVM) and can support over 4,000 transfer transactions per second with an average transaction cost lower than $0.005. The team is seeking feedback from validators and dApp developers.

3

U.S. House committee to vote on crypto, stablecoin legislation in July

. The US House Financial Services Committee plans to debate and advance two proposals in July to create clearer rules for digital assets transitioning from securities to commodities and establish a comprehensive stablecoin regulatory framework.

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $1.17 trillion - UP 11.9%

• Bitcoin price - $30,041 - UP 15%

• The dollar index (DXY) - 102.65 - UP 0.4%

• Bitcoin Dominance - 49.8% - UP 4.0%

• Crypto Fear and Greed Index - 65 - the market is in greedy state

ICO CALENDAR

• 26 June 2023 - MindConnect

• 28 June 2023 - Goracle

THE HOT TAKE

Institutional players are building their product base for an impending bull run

After months of flat activity, the market has started to come back to life. Bitcoin dominance has hit 50% for the first time since April 2021. Recent interest from institutional players seems to have sparked a rally in the markets. Today, we take stock of developments in the institutional space off the heels of hostile regulatory actions last week.

1. BlackRock takes giant leap toward spot Bitcoin ETF with SEC filing

Despite numerous failed attempts by others to launch spot Bitcoin ETFs in the US, BlackRock has put forth plans for its iShares Bitcoin Trust, marking its attempt to break into this elusive market. ETFs enable masses to invest in Bitcoin without holding the asset – giving them the ability to benefit from its price movements without custodial risk. BlackRock is the world’s largest asset manager with over $10 trillion assets under management (AUM).

The US SEC has a long history of denying Bitcoin spot ETFs, citing concerns about market manipulation and the lack of a surveillance-sharing agreement between a “regulated market of significant size” and a regulated exchange. As prominent players apply for ETFs, it implies there is an inherent market demand for such a product. The SEC will be forced to relook its stance in the near term.

2. Are non-custodial solutions the way to beat regulations?

Recently, EDX Markets, a crypto exchange backed by Citadel Securities, Fidelity Investments, and Charles Schwab, was launched. The platform aims to differentiate itself by operating as a non-custodial exchange, thus not directly handling customers' assets and will list only four crypto assets - BTC, ETH, LTC, and BCH, aiming to avoid potential issues with the SEC.

Source: Twitter

3. Fidelity is gearing up for a big move

On a related note, Fidelity, the third-largest global asset manager, is rumoured to be planning a big move in crypto. This could involve either buying out Grayscale or filing an application for a Bitcoin spot ETF. Such a move, along with BlackRock's recent filing of an ETF application, could position these firms to trigger adoption in the US digital asset space.

Interesting stat being - if these firms could allocate just 0.3% of their AUM towards Bitcoin, they could possibly buy the entire circulating volume of BTC in the market.

4. Battle for ETFs intensifies

Three other asset management firms, Bitwise, WisdomTree & Invesco have now submitted filings to the SEC to launch spot Bitcoin ETFs in the United States. Few of these companies had previously attempted to launch Bitcoin ETFs in 2021. So far, the SEC has only approved Bitcoin ETFs tied to US-traded futures, citing a lack of proper cross-exchange market surveillance as a reason for not approving.

5. Binance is launching an L2

Binance isn’t slowing down in spite of regulatory uncertainty.

It launched opBNB this week, a solution that is based on Optimism OP Stack to further enhance BSC scalability while preserving affordability and security. opBNB is based on the bedrock version of the Optimism OP Stack that is EVM-compatible and has been built on top of the existing BNB Chain. Although BNB will remain the native currency of the opBNB chain, the new rollup will have "native integration" with the BNB ecosystem. So we can expect a similar on and off-ramp experience directly with the Binance global exchange as we do with the existing BNB Chain today.

Key takeaway

All the above point to one thing – institutions are serious about crypto’s future and have the foresight to work on products when retail adoption in the market is at a low.

Institutions typically have a greater understanding of a market and their recent conviction is a sign to retail investors that the future seems bright. Their involvement will bring much needed credibility and stability in the ecosystem as well as help in fighting litigations that come about from regulatory bodies. As other countries bring about favourable crypto regulations, we anticipate US (and India) to follow suit else be isolated.

However, the excitement around these right now doesn’t mean we are going to be in a sustained bull run this year. The Bitcoin halving is in 2024 (about 9 months from now) – these moves by institutions are in preparation for the post-halving world where retail adoption will be at the highest. While we will see short-term rallies (and declines), it is mostly from veteran investors rerouting capital and hence may not be sustained. The days of glee are not far behind. We have waited for 18 months for a bull market now, another 6 months may seem like a breeze.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.