Nickel News Roundup

October 18th, 2024

Market Overview:

Digital assets surged back into growth this week, amidst strong ETF volumes and renewed political optimism.

Bitcoin bounced back this week, briefly breaching $68,000 for its highest value since May
The leading digital asset experienced steady growth throughout the week, growing from a Friday low of $60,590 to a high of $68,260 on Wednesday
Bitcoin oscillated between $67,000 and $68,000 from Wednesday onwards, but was unable to sustain a prolonged run above the latter mark
Analysts offered numerous potential reasons for the swift shift to bullish momentum, including increased political support in the US, a potential economic stimulus effect from China, overall appetite for riskier assets, and “revitalising conditions in the institutional side of the market”
Ether built further on last week’s growth, increasing from a Friday low of $2,406 to a Tuesday top of $2,662
Overall digital asset market capitalisation grew by $200bn to $2.32bn
According to industry monitoring site DeFi Llama, total value locked in DeFi jumped around $6bn to $87.4bn

Digital assets moved into bullish momentum this week, as more positive political positioning aligned with a great increase in ETF volumes (and inflows!). Activity and adoption continued across the world in fields as diverse as stablecoins, VC, and tokenisation, whilst BlackRock CEO Larry Fink once again sang the praises of this unique, innovative, and growing asset class.

What happened: ETF News

How is this significant?

Digital asset ETFs had one of their most bullish weeks in recent memory, as both Bitcoin and Ether posted inflows—albeit strongly dominated by Bitcoin volumes
According to CoinShares data, digital asset investment products achieved $407m net inflows in the trading week ending the 11th of October, with company analysts highlighting political sentiment as a key investor motivation in the shift from recent conflict-driven outflows
This included $419m inflows for Bitcoin, dominating volume across digital asset investment products, with multi-asset investment products achieving a (modest) 17th consecutive week of inflows
Spot Bitcoin ETFs surged ahead of last week’s strong volumes, registering $555.9m inflows on Monday
At the time of writing, Bitcoin ETFs have experienced five consecutive days of comfortable nine-figure inflows; $253.6m, $555.9m, $371m, $458.5m, and $161.5m (excluding the late-reporting IBIT) respectively
Overall trading volumes were also elevated, with several days trading more than $2bn worth of Bitcoin
BlackRock’s IBIT led the way, registering nine-figure inflows of $288.8m and $393.4m
Fidelity’s FBTC and Bitwise’s BITB both accrued over $100m inflows on Monday, at $293.3m and $100.2m respectively, whilst ARK Invest’s ARKB added a commendable $69.8m daily candle
Grayscale’s 1.5% fee GBTC fund experienced an unprecedented three days of inflows ($37.8m, $8m, and $45.7m) this week, indicating that it may be closer to achieving equilibrium after bleeding AUM since launch
Bitcoin ETFs passed a new milestone on Thursday, exceeding $20bn net inflows for the first time
As Bloomberg’s chief ETF analyst Eric Balchunas pointed out “the most important number, most difficult metric to grow in ETF world… For context, it took gold ETFs about five years to reach the same number. Total assets now $65b, also a high water mark”
Spot Ether ETFs posted overall inflows despite mixed daily performances, thanks to a strong Wednesday of $24.7m inflows
Although the trend of inflows superceded those of recent weeks, volume continues to lag well behind Bitcoin products, as (per BlackRock head of digital assets Robert Mitchnick), the “narrative” of Ethereum is more complex than that of Bitcoin
Elsewhere in ETFs, new issuer Canary followed up last week’s XRP ETF filing with an application for a Litecoin ETF, whilst Grayscale filed to convert its existing GDLC Large Cap Fund into an ETF, mirroring the process which led to its Bitcoin and Ether ETFs
If approved, a GDLC ETF would offer exposure to Bitcoin, Ether, Solana, XRP, and AVAX (Avalanche)
The vast majority (94%) of this exposure however would be concentrated across Bitcoin and Ether, according to the current allocation of GDLC
CME open interest reached a new record high this week, with K33 Research head Vetle Lunde noting that “the prevailing institutional bias is building long exposure. Alongside the wild surge in open interest, futures premiums have climbed to 5-month highs”

What happened: Political and regulatory news

How is this significant?

Digital assets continued to feature prominently in political and regulatory discussions this week, as both Donald Trump and Kamala Harris continued overtures to the crypto sector during their presidential campaigns
Former president Trump’s World Liberty Financial (WLF) DeFi project appeared to launch its token sale to strong initial interest as servers crashed, but subsequent sales were seriously sluggish
At the time of writing, just over 4% of available WLFI tokens have been sold, with around 12,000 unique wallet addresses (not necessarily unique wallet owners) as holders
This sees WLF well short of its proposed $300m sales goal
Numerous potential reasons have been cited for the slow sales, predominantly exclusion of non-accredited investors and US persons from buying, and the fact that the tokens are non-transferable—until such a time as a governance vote (using the WLFI tokens) allows transfer
This initial restriction is seen as anathema across the broader DeFi community, but appears a deliberate move to assuage regulatory scrutiny
Kamala Harris pledged a regulatory framework for digital assets, in a move viewed as counteracting growing support for Trump amongst minority voters
Increased expectations of a Trump (and therefore economically laissez-faire Republican party) victory appear to have catalysed positive movement across markets this week
However, it should be noted that there is a wide disconnect between the odds offered on betting and prediction markets, and the odds according to most polls, which are more evenly split between the candidates
Blockchain-based prediction platform Polymarket exceeded $2bn in volume on the presidential race this week, just 23 days after surpassing $1bn
Billionaire Stanley Druckenmiller told Bloomberg he believes markets are pricing in a Trump victory, claiming “You can see it in the bank stocks, you can see it in crypto”
According to Crucible Capital General Partner Meltem Demirors, the outcome of the election isn’t critical to the industry; “it doesn't really matter too much who's President” because digital assets are now “an unstoppable force”
Ripple president Monica Long characterised SEC chair Gary Gensler’s behaviour towards the industry as “on the warpath” as SEC commissioner Mark Uyeda told FOX Business “I think our policies and our approach over the last several years have been just really a disaster for the whole industry”
In the Massachusetts senatorial election, incumbent anti-crypto campaigner Elizabeth Warren and her pro-crypto opponent John Deaton clashed on digital assets
Warren alleged Deaton would be beholden to digital asset firms after accepting campaign funding from the industry, whilst Deaton declared that he helped usher in ETFs for retail investors by suing the SEC on behalf of Ripple
He added that Warren’s “bill bans Bitcoin self-custody in America, yet she's allowing the banks to custody bitcoin—another example that Senator Warren's policies do not help poor people, they do not help the working class… I wish Senator Warren would attack inflation the way she attacks crypto”
Over in Europe, Italian authorities announced plans to increase capital gains taxes on Bitcoin and digital assets from 26% to 42%

What happened: Stablecoin news

How is this significant?

Stablecoin developments continued apace this week, as both industry and TradFi players made significant moves within the stablecoin space
Payments processing giant Stripe is in the process of acquiring a platform that allows businesses to create, hold, accept, and transfer stablecoins, according to Bloomberg sources
Stripe aim to acquire Bridge, a platform backed by a wide range of VCs including Sequoia, Ribbit Capital, Index, and Haun Ventures
Forbes reported a potential $1bn valuation for the deal, although representatives from both Stripe and Bridge declined to comment
Thai banking institution Siam Commercial Bank (SCB) introduced stablecoin-based cross-border payments for clients this week, in partnership with blockchain infrastructure providers Lightnet and institutional custody firm Fireblocks
Lightnet CEO Tridbodi Arunanondchai outlined numerous benefits from stablecoins “This solution will provide significant improvements to customers’ experience in cross-border money transfer and will lower transaction time and cost and be accessible on a 24/7 basis. This project also promotes financial inclusion as there is a lower capital requirement per transaction”
Early on Friday, the Bangkok Post reported that this includes Thailand’s first stablecoin
SCB EVP Thanawatn Kittisuwan commented that “By leveraging blockchain technology and stablecoins, we are making cross-border remittances more efficient, reliable and accessible for everyone”
According to Bloomberg sources, stablecoin leader Tether is in discussions on lending its profits to commodities traders, as well as use of its stablecoins in mainstream commodity trades
The insiders told Bloomberg that “Tether’s pitch is particularly attractive because its funding would not be subject to the same stringent regulatory conditions as traditional lenders, potentially speeding up payments and trades”
Tether CEO Paolo Ardoino confirmed the interest, but kept cards close to his chest regarding further details; “We likely are not going to disclose how much we intend to invest in commodity trading. We are still defining the strategy”
XRP issuers Ripple Labs progressed towards the launch of its proposed RLUSD stablecoin, pending regulatory approval from the NYDFS
RLUSD will be backed by “short-term US treasuries, dollar deposits, and cash equivalents” on the XRP and Ethereum blockchains
According to Ripple Labs president Monica Long, “For RLUSD and stablecoins generally, we definitely have validated the utility of them with payments”
A new report by venture capital firm a16z found that crypto usage is currently at an all-time high, citing technology improvements as a key driver for stablecoin adoption
The report stated that “the steep decline in user transaction fees has helped stablecoins find product-market fit”

What happened: Tokenisation news

How is this significant?

Boston-based banking behemoth State Street confirmed tokenisation ambitions recently, as chief product officer Donna Milrod told Financial News that it will tokenise a bond and money market fund “through part of next year”
This follows a partnership with tokenisation experts Taurus, announced in August
Bloomberg noted increased tokenisation activity from Wall Street, citing BlackRock’s BUIDL, its use as collateral, and various other tokenisation initiatives from firms including JP Morgan, Franklin Templeton, BNY, and the aforementioned State Street
RWA (real world asset) tokenisation platform Plume announced it owns $100m of solar assets available to users who want to generate yield
CEO Chris Yin told industry publication TheBlock “This means that users can deposit their crypto assets, such as stablecoins or other assets, into a solar token and then beginning earning yields on solar assets”
Speaking at a recent industry conference in Miami, Ripple Labs president Monica Long stated that stablecoin growth was proof of tokenisation’s appeal, and their motivation for entering the space
She said “We're believers in this broader trend of real-world asset tokenization. When we think beyond tokenising money to different instruments and capital markets like securities and bonds, real estate and other assets, you need a stablecoin that's trusted and very reliable, very robustly managed for on and offramps as well”

What happened: VC news

How is this significant?

Bitcoin infrastructure firm Blockstream raised $210m this week via a convertible note offering
The funding round was led by Fulgur Ventures, supporting the blockchain infrastructure firm founded in 2014
According to a press release, Blockstream’s new funds “will be used to accelerate adoption and development of the company's layer-2 technologies, to grow its mining operations and to expand its Bitcoin treasury”
Blockstream co-founder Adam Back stated “This latest fundraise represents a defining moment for Blockstream as we embark on a critical new phase of growth to further bridge the gap between Bitcoin and the wider world of finance”
Miners Coreweave closed a $650m credit facility designed to leverage existing crypto mining hardware for increased computational demand from the AI industry
The credit facility was led by JPMorgan, Goldman Sachs, and Morgan Stanley will allow further growth of Coreweave’s cloud computing services
Crypto trading software developers Talos, a unicorn backed by a16z, is looking to double headcount with its warchest, focusing primarily on Asian expansion
Talos’ APAC head Samar Sen stated “Asia punches above its weight in terms of contribution to the bottom line of global digital-asset companies. Many of Talos’ top clients, by trading volume, are APAC-based firms”
African crypto startup Yellow Card raised $33m in a Series C round this week, concentrating on its shift towards serving business customers
CEO Chris Maurice told TechCrunch “The big shift for us has been our focus on working predominantly with businesses now. When we started, we targeted the B2C market to serve retail customers. However, we realised that the real users who benefit the most from this technology are businesses”
He added “We’re now more aligned with what our customers, particularly businesses, use us for, which is to manage treasury and access stablecoins. That’s what led to the change in messaging”
Blockchain privacy platform zkPass completed a $12.5m Series A at a $100m valuation, featuring contributions from dao5, Animoca Brands, Flow Traders, Amber Group, IOBC Capital, Signum Capital, MH Ventures and WAGMI Ventures
The funding wasn’t raised via equity, but rather via a simple agreement for future tokens (SAFT); upon launch, zkPass’ tokens will have a fully diluted valuation of $100m

What happened: Crypto custodians Copper recruit Goldman Sachs alum as new CEO

How is this significant?

London-based Copper, one of the largest digital asset custodians in the world, appointed a new CEO this week with a lengthy and successful career at some of the largest firms in TradFi
Amar Kuchinad joins the firm after serving as MD at Goldman Sachs
Copper’s founder Dmitry Tokarev recently stepped down as CEO, moving into a board role as founder director “as [Copper] looks to secure more traditional financial firms as clients and make inroads in the US market”
Also on the board is former UK chancellor Philip Hammond, one of the highest-profile appointments in the UK crypto space
Speaking about Kuchinad’s appointment, Tokarev commented that it aligned with the firm’s strategic shift; “We considered the next best person to take this business into the traditional market. We want to work with banks”
Copper’s Clearloop off-exchange settlement has grown alongside increased institutional activity in the space; in July it processed over $120bn in trading volume, double the amount of two months prior

What happened: Larry Fink declares Bitcoin “an asset class in itself”

How is this significant?

Speaking during BlackRock’s Q3 earnings call, CEO Larry Fink was effusive in his praise of digital assets, highlighting Bitcoin’s unique position
Fink believes that the next US president will have minimal impact on the industry, stating “I'm not sure either president would make a difference. I do believe the utilisation of assets are going to become more and more of a reality worldwide
He outlined growing corporate interest, saying “Conversations we're having with institutions worldwide, conversations about how should they think about digital assets, what type of asset allocation there should be. I mean, we believe Bitcoin is an asset class in itself”
He added that “I truly believe we will see a broadening of the market of these digital assets. And then we'll see how do—does each and every country look at their own digital currency, but that's a very different asset than a Bitcoin in itself”

Bitcoin bounced back this week, briefly breaching $68,000 for its highest value since May
The leading digital asset experienced steady growth throughout the week, growing from a Friday low of $60,590 to a high of $68,260 on Wednesday
Bitcoin oscillated between $67,000 and $68,000 from Wednesday onwards, but was unable to sustain a prolonged run above the latter mark
Analysts offered numerous potential reasons for the swift shift to bullish momentum, including increased political support in the US, a potential economic stimulus effect from China, overall appetite for riskier assets, and “revitalising conditions in the institutional side of the market”
Ether built further on last week’s growth, increasing from a Friday low of $2,406 to a Tuesday top of $2,662
Industry sentiment on the Fear & Greed index improved considerably compared to last week, moving from 37/100 (indicating fear) to 58/100 (the upper boundaries of “neutral”)
Overall digital asset market capitalisation grew by $200bn to $2.32bn
According to industry monitoring site DeFi Llama, total value locked in DeFi jumped around $6bn to $87.4bn

Digital asset ETFs had one of their most bullish weeks in recent memory, as both Bitcoin and Ether posted inflows—albeit strongly dominated by Bitcoin volumes
According to CoinShares data, digital asset investment products achieved $407m net inflows in the trading week ending the 11th of October, with company analysts highlighting political sentiment as a key investor motivation in the shift from recent conflict-driven outflows
This included $419m inflows for Bitcoin, dominating volume across digital asset investment products, with multi-asset investment products achieving a (modest) 17th consecutive week of inflows
Spot Bitcoin ETFs surged ahead of last week’s strong volumes, registering $555.9m inflows on Monday
At the time of writing, Bitcoin ETFs have experienced five consecutive days of comfortable nine-figure inflows; $253.6m, $555.9m, $371m, $458.5m, and $161.5m (excluding the late-reporting IBIT) respectively
Overall trading volumes were also elevated, with several days trading more than $2bn worth of Bitcoin
BlackRock’s IBIT led the way, registering nine-figure inflows of $288.8m and $393.4m
Fidelity’s FBTC and Bitwise’s BITB both accrued over $100m inflows on Monday, at $293.3m and $100.2m respectively, whilst ARK Invest’s ARKB added a commendable $69.8m daily candle
Grayscale’s 1.5% fee GBTC fund experienced an unprecedented three days of inflows ($37.8m, $8m, and $45.7m) this week, indicating that it may be closer to achieving equilibrium after bleeding AUM since launch
Bitcoin ETFs passed a new milestone on Thursday, exceeding $20bn net inflows for the first time
As Bloomberg’s chief ETF analyst Eric Balchunas pointed out “the most important number, most difficult metric to grow in ETF world… For context, it took gold ETFs about five years to reach the same number. Total assets now $65b, also a high water mark”
Spot Ether ETFs posted overall inflows despite mixed daily performances, thanks to a strong Wednesday of $24.7m inflows
Although the trend of inflows superceded those of recent weeks, volume continues to lag well behind Bitcoin products, as (per BlackRock head of digital assets Robert Mitchnick), the “narrative” of Ethereum is more complex than that of Bitcoin
Elsewhere in ETFs, new issuer Canary followed up last week’s XRP ETF filing with an application for a Litecoin ETF, whilst Grayscale filed to convert its existing GDLC Large Cap Fund into an ETF, mirroring the process which led to its Bitcoin and Ether ETFs
If approved, a GDLC ETF would offer exposure to Bitcoin, Ether, Solana, XRP, and AVAX (Avalanche)
The vast majority (94%) of this exposure however would be concentrated across Bitcoin and Ether, according to the current allocation of GDLC
CME open interest reached a new record high this week, with K33 Research head Vetle Lunde noting that “the prevailing institutional bias is building long exposure. Alongside the wild surge in open interest, futures premiums have climbed to 5-month highs”