Digital assets performed strongly this week, as Bitcoin returned to levels near its record highs following praise for the industry from the new SEC chair.
Bitcoin faced declines during broader market concern over the Trump/Musk quarrel, but recovered strongly on Monday to come near record highs once more
Bitcoin dropped to lows of $100,700 as global markets were uncertain how to handle the public fallout between the president and former DOGE advisor, but it rallied into the weekend before hitting a high of $110,320 on Monday
Ether experienced similar movements, albeit with a slower recovery and sharper rally; growing from a Tuesday drop of $2,399 to a $2,710 on Monday
Overall industry market capitalisation grew by $100bn to $3.41tn
According to industry monitoring site DeFi Llama, total value locked in DeFi grew to $115.5bn
Digital assets showcased strength amidst chaotic conditions in wider markets. Stablecoin issuer Circle had a successful IPO, Ether ETFs continued their winning run, JP Morgan (indirectly) approved digital assets as collateral for loans, SEC chair Paul Atkins praised the industry, South Korean crypto enthusiasts celebrated supportive government policies, and much more.
What happened: ETF News
How is this significant?
Digital asset investment products logged an eighth consecutive week of inflows, as Ether products extended their recent impressive performances
According to Coinshares data published on Monday, Ether products added $295m in the trading week ending Friday the 6th, helping to compensate for $57m outflows from Bitcoin funds
Spot Bitcoin ETFs experienced mixed performance, as nine-figure outflows sandwiched positive showings in the middle of the week
The best performance came on Tuesday, as ETFs accrued $375m in fresh capital
This was led by ARK Invest’s ARKB *$140m) and followed by Fidelity’s FBTC ($137m), as BlackRock’s IBIT (uncharacteristically) sat in third place ($58m)
IBIT did lead inflows the next day with $284m, but overall daily inflows were more muted at $87m due to significant FBTC outflows
Bloomberg chief ETF analyst Eric Balchunas stated “IBIT just blew through $70bn and is now the fastest ETF to ever hit that mark in only 341 [trading] days, which is 5 times faster than the old record held by GLD of 1,691 days”
Outlining the remarkable scale of IBIT’s achievement, Balchunas said “When BlackRock filed for IBIT, the price was $30k and the stench of FTX was still in air. It's now $110k (a return that is 7 times that of the mighty S&P 500) and is now seen as legitimate for other big investors”
New data from Coinbase revealed that institutional investors now comprise 25% of all Bitcoin ETF holders, including increased exposure from investment advisors
Tuesday featured rare nine-figure inflows, as the category logged $109m, led by BlackRock’s ETHA fund
According to early Monday trading data, Bitcoin and Ether ETFs both featured strong inflows ($386m and $53m respectively) as the markets opened the week buoyantly
Elsewhere in ETFs, several issuers petitioned the SEC to move towards a “first-to-file” ETF approval process, arguing that that current operating procedure (of numerous simultaneous approvals) creates a less fair marketplace
VanEck, 21Shares, and Canary Capital shared an open letter stating “the reduced incentive for pioneering product development has broader implications… It diminishes investor choice, compromises market efficiency, and fundamentally undermines the Commission's mission of protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation”
Indeed, Circle’s IPO was one of the most underpriced in history, with $1.76bn left on the table, as shares went to institutional investors for $31 each ahead of the official launch; $52 less than investors were willing to pay on the open market
When trading officially began, the stock shot up from an opening bell of $31 to $107 at the time of writing. Circle co-founder and CEO Jeremy Allaire is now a billionaire
At the time of writing, Circle’s (CRCL) intraday market capitalisation sits at nearly $28bn
As the industry’s second-largest stablecoin (at $61bn market cap), Circle’s USDC has generally avoided the questions and concerns occasionally faced by number one player USDT (and its issuer Tether) over perceived lacks of transparency (e.g. Tether's tendency to publish attestations of backing assets, but not full audits)
Allaire commented that the successful launch is further proof of a maturing market; "this transformation into being a public company will absolutely be additive to our ability to work with mainstream institutions around the world".
Most pointedly, Arca chief investment officer Jeff Dorman criticised "fat TradFi allocations" (rather than giving crypto-native firms more exposure) as the "exact opposite of crypto ethos”
Bloomberg meanwhile believes that the market's response to Circle will buoy any firms currently considering their own IPOs: as Renaissance Capital senior strategist Matt Kennedy was quoted; "They are talking to their bankers today, I am sure"
Deutsche Bank became the latest major bank to consider issuing its own proprietary stablecoin, alongside tokenised deposits
Digital asset chief Sabih Behzad told Bloomberg “We can certainly see the momentum of stablecoins along with a regulatory supportive environment... Banks have a wide variety of options available to engage in the stablecoin industry—everything from acting as a reserve manager, through to issuing their own stablecoin, either alone or in a consortium”
Whether Deutsche develops solo or within a consortium remains to be seen; ING’s CEO Steven van Rijswijk commented earlier in the week that “I do see a role for let’s say a European stablecoin, or European banks working on a stablecoin, especially for settlement purposes in a digital world”
Speaking at the commission’s latest “Crypto Roundtable” event, new SEC chair Paul Atkins spoke positively about the industry, what it presents, and planned policy initiatives
The name of the session (DeFi and the American Spirit) itself made clear his positive position compared to predecessor Gary Gensler
The SEC asserted that “The prior administration discouraged Americans from participating in blockchains by asserting through lawsuits, speeches, regulation, and threatened regulatory action that participants and staking-as-a-service providers may be engaged in securities transactions”
Atkins added “I am in favour of affording greater flexibility to market participants to self-custody crypto assets, especially where intermediation imposes unnecessary transaction costs or restricts the ability to engage in staking and other on-chain activities”
The SEC chair said “I do not believe that we should allow century-old regulatory frameworks to stifle innovation… We should not automatically fear the future”
He also recognised “Most current securities rules and regulations are premised upon the regulation of issuers and intermediaries. The drafters of these rules and regulations likely did not contemplate that self-executing software code might displace such issuers and intermediaries”
Atkins disclosed “I have directed the staff to consider a conditional exemptive relief framework or ‘innovation exemption’ that would expeditiously allow registrants and non-registrants to bring on-chain products and services to market”
Ultimately, CEO Dimon seems to be having his cake and eating it too, expressing his dislike for the asset class whilst acknowledging broader market support for the asset class; “I don’t think we should smoke, but I defend your right to smoke… I defend your right to buy Bitcoin, go at it”
Uber CEO Dara Khosrowshahi recently spoke at the Bloomberg Tech Conference in San Francisco, and revealed that stablecoins and crypto are an area on the company’s agenda
He noted the practicality of stablecoins as a key attraction over speculative tokens, saying they’re “quite promising especially for global companies”, citing improved efficiencies and savings in cross-border transfers as a particular area of interest
Khosrowshahi added “that’s super interesting to us and we’re definitely going to take a look”
The CEO previously indicated the app is open to accepting crypto payments in future, but it will require more efficiencies and lower costs for token payments across blockchains
According to Khosrowshahi, Uber is currently in the “study phase” of any possible stablecoin integration
Bitcoin’s mining difficulty recently reached a new record high, with the highest-ever network hash power reflecting the asset’s recent run to all-time high values
The mining difficulty can be viewed as a proxy for Bitcoin demand; the more people are trying to mine Bitcoin, the higher the competition (in overall hash power), and thus the higher the mining difficulty to maintain a consistent block mining time
Leading publicly-listed miner Marathon Holdings (MARA) also had a record month in terms of production, increasing the number of blocks won by 38% month-on-month
Pump dot fun, a leading token creation platform on the Solana blockchain, announced plans this week to raise $1bn with plans to issue its own proprietary token at a $4bn valuation; but some in the industry expressed concern over this
The platform was crucial in Solana’s outstanding growth last year, simplifying the token issuance process for those without coding background, causing a proliferation of memecoins across Solana
However, there are concerns that—much like Donald Trump’s official memecoin last year—the platform’s power of publicity could prove extractive to liquidity from all other tokens across the ecosystem
Industry publication TheBlock reported that the token sale could occur within the next two weeks
Syncracy Capital founder Ryan Watkins told Bloomberg “The raise will take place over the course of a month. And I think during that month, any asset in the Solana ecosystem is vulnerable to being sold to fund that purchase”
Sources reported that the potential PUMP token could distribute protocol revenues to the token holders from both the launchpad (pumo dot fun) and its Solana-based dex (PumpSwap); revenues which have ranged between $1m and $7m daily year-to-date
Ahead of South Korea’s recent elections, it was widely-expected that both candidates would provide a boon to the local digital asset industry; and less than a week after election, this seems to be the case
Under the proposed Digital Asset Basic Act, companies with a minimum 500m Won in equity capital will be able to issue stablecoins with fully-backed reserves
Ahead of the legislation reveal, the local Korea Times newspaper reported that the government’s new digital asset committee feared the Bank of Korea’s licencing and oversight control was “behind global norms”
The committee chair commented “The potential of won-based stablecoins is not limited to domestic payment but expands to bolstering partnerships with existing fintech platform operators, a synergy best realized when led by the private sector”
This sentiment also led to a surge in value for local payment firms like KakaoPay, assumed to be involved in any future stablecoin rollouts
According to Bank of Korea data (per Bloomberg), stablecoins are growing, but remain dominated by the dollar; “Transactions involving USDT, USDC and USDS on five major domestic exchanges reached 57 trillion won in the first quarter”
South Korea is one of the most active digital asset trading nations in the world, but because of restrictions requiring the use of local exchanges, the 15 million local traders sometimes find themselves paying a premium over global prices
What happened: Crypto Treasury news
How is this significant?
Bitcoin treasury specialists Strategy (formerly MicroStrategy) predictably added yet further to its Bitcoin holdings, brining total holdings to 582,000 Bitcoin (and counting)
It acquired 1,045 Bitcoin in its latest round at an average $105,426 ($110.2m) at per Bitcoin
According to the terms of the deal, the “555 million” plan will involve issuance of 555 million shares, “with equity sold incrementally to minimize market impact over the next two years”
This financing would allow Metaplanet to up its total acquisition goal from 100,000 Bitcoin to 210,000 Bitcoin, putting it in the “1% club” of entities owning said amount of Bitcoin’s maximum total supply
This weekly financial roundup is for informational purposes only and is not financial, investment, or legal advice. Information is based on public sources as of publication and may change. Consult a professional before acting.