A week in crypto: Bitcoin ETFs AUM surge to nearly $4 billion amid sell-off and Donald Trump weighs in on CBDCs
DATA from CryptoCompare shows that the price of Bitcoin started last week with a slight upward move, from around $42,500 to $43,000. The flagship cryptocurrency then endured a significant sell-off that saw its price drop to $40,300 this morning.
Ethereum’s Ether, the second-largest cryptocurrency by market capitalization, moved in a similar way, starting the week with a rise from $2,500 to $2,600, before enduring a sell-off that saw its price drop below the $2,400 mark.
Headlines in the cryptocurrency space this week focused on the trading frenzy sparked by the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States, with CCData’s Institutional Primer on the impact of spot Bitcoin ETFs showing that Grayscale’s GBTC saw significant outflows, while BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund were the primary beneficiaries.
Data shows these ETFs now collectively hold 95,000 BTC after just six full trading days, with their assets under management (AUM) now nearing $4 billion.
In a report, analysts from JPMorgan noted it was unclear how much new capital will be moving into spot Bitcoin ETFs. Still, they added that significant inflows from other cryptocurrency-focused products were expected.
The analysts noted that even without any new capital entering the market, these ETFs could see an inflow of up to $36 billion. They anticipate a movement of about $3 billion from the Grayscale Bitcoin Trust into the new spot ETFs, and as much as $20 billion from retail investors transitioning from crypto wallets to these funds.
Over the week, the SEC has notably delayed its verdict on Fidelity’s spot Ether ETF proposal as it dealt with five more leveraged Bitcoin ETFs seeking its approval. The review period for Fidelity’s spot ETH ETF was delayed by an additional 45 days so the regulator has “sufficient time to consider the proposed rule change and the issues raised".
As the SEC decided to prolong its evaluation period for the spot ETH ETF, Direxion has lodged applications for five Bitcoin ETFs, following similar filings from ProShares and REX Shares. On January 16, ProShares submitted applications for five leveraged Bitcoin-tracking ETFs, while REX Shares had previously filed for six on January 3.
Bitcoin miner reserves plunge to 30-month low
This past week, Bitcoin miners sold more than 10,000 BTC worth roughly $440 million at the time of the sale, resulting in the most significant decrease in miner reserves in over a year.
Bitcoin miner reserves have fallen to their lowest point since July 2021, currently standing at 1.83 million BTC. This is valued at approximately $78 billion, following a decrease of 22,800 coins over the previous year.
Notably, the week also saw prominent Bitcoin mining firm Core Scientific emerge from Bankruptcy and receive the green light for its Chapter 11 reorganization plans from the Southern District of Texas bankruptcy court.
The mining firm is expected to re-list its shares on the Nasdaq by the end of the month, and is poised to completely clear its current debts, with existing shareholders expected to receive around 60% equity in the restructured company.
This approval comes after the successful completion of a significant equity rights offering of $55 million earlier in the month, representing one of the last stages in the company’s restructuring process.
Meanwhile, leading stablecoin issuer Tether, which has been building its own Bitcoin mining operation and buying shares in other firms, has seen its BTC holdings reach 66,465 BTC. The firm has been allocating up to 15% of its quarterly profits to Bitcoin purchases.
Former US President Donald Trump vows to ‘never allow’ CBDCs
Former US President and current presidential candidate for 2024 Donald Trump, has revealed his disapproval of the Federal Reserve’s potential creation of a central bank digital currency (CBDC), promising to “never allow” such a currency.
The pledge was made during a campaign speech in Portsmouth, New Hampshire. The former president stated that he was making “another promise to protect Americans from government tyranny” by doing so.
Per his words, a CBDC would “would give the federal government, our federal government, absolute control over your money”.
Meanwhile, Venezuela reportedly announced it’s phasing out its Petro cryptocurrency, five years after launching it. The cryptocurrency was launched in February 2018 by President Nicolás Maduro, and was initially backed by the country’s oil reserves.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
