Even so, crypto assets still held their ground better than many major stocks, including Nvidia, which suffered the largest single-day drop in market capitalisation in history
Bitcoin fell from a Friday high of $59,780 to a low of $55,870 on Thursday
Ether achieved its weekly high of $2,550 on Tuesday, before sharply dropping down to a low of $2,343 on Wednesday
Overall digital asset market capitalisation dipped down below the $2tn mark, with a current valuation of $1.98tn
According to industry monitoring site DeFi Llama, total value locked in DeFi fell in line with Ether’s decline, to $79bn
Digital assets suffered the effects of wider global market uncertainty and investor fearfulness, with ETF trading dominated by outflows. However, political support for the asset class continued to grow in the US, numerous firms (and even state governments) moved to secure a position in the stablecoin space, more new funds emerged, a leading Swiss bank launched Bitcoin and Ether trading for customers, and a new survey revealed the scale and attitudes of institutional crypto asset adoption.
What happened: ETF News
How is this significant?
Digital asset ETFs experienced mixed performance once again, as global markets tumbled and investor sentiment turned more fearful
According to CoinShares data, digital asset investment products (dominated by spot ETFs) experienced large outflows in the week ending Friday the 30th, totalling $305m
Spot Bitcoin ETFs faced major outflows during a trading week that was truncated due to the US Labour Day public holiday
On Tuesday (and in preliminary Thursday data), ETF providers experienced cumulative outflows above $200m
Fidelity’s FBTC, the second-largest spot Bitcoin ETF, registered $162m outflows on Tuesday to lead the losses
Although BlackRock’s IBIT (along with WisdomTree’s BTCW) managed to dodge the outflow trend with net neutral days on Tuesday and Wednesday, it nonetheless faced one of its first-ever outflows days late last week
At the time of writing, performance on this week’s trading day was so depressed that only one fund—Bitwise’s BITB—could claim a day of net inflows, bringing in $9.5m on Wednesday
Spot Ether ETFs actually outperformed their Bitcoin counterparts this week—albeit by virtue of a chart dominated by net zero flows, rather than outflows
Grayscale’s converted ETHE trust (trading with a 2.5% fee) continued its trend of outflows, whilst the rest of the funds displayed zero flows, except for minor inflows ($4.9m and $3.1m respectively) on Fidelity’s FETH and Grayscale’s 0.15% mini-ETH ETF
The FBI issued a warning for ETF issuers and participants to exercise vigilance, claiming that North Korean hackers could target “attempt malicious cyber activities against companies associated with cryptocurrency ETFs or other cryptocurrency-related financial products”
In its press release, the Bureau listed a variety of indicators and mitigations for companies operating in the crypto sphere to be aware of in order to protect themselves from malicious social engineering tactics
On Wednesday, RexShares filed for a Crypto Equity Premium Income ETF, the latest potential model for digital asset-based ETFs
What happened: Political news
How is this significant?
Reporting around crypto industry funding continued to gain wide media attention this week (with the caveat that it concentrates on congressional contests rather than presidential race)
Speaking to Bloomberg, Coinbase’s chief legal officer Paul Grewal predicted that unlike in previous administrations, we may see a pro-crypto Congress next year
Grewal said “what we’re hearing is there still remains an open mind to a new approach regarding crypto… we’re going to see progress in the autumn on [FIT21] legislation… there’s no question about it, we are going to see a pro-crypto Congress emerge, regardless of the outcome of individual races”
According to data from Public Citizen analysis “The crypto industry has accounted for almost half of the nearly $250 million in corporate donations to political campaigns in 2024... Coinbase alone is responsible for more than $52 million of that amount”
This represents an exponential growth from the cumulative sub-$500,000 corporate donations by the exchange between 2016 and 2022
Donations by the industry are largely non-partisan, supporting SuperPACs that donate to candidates on the basis of crypto policies, rather than political affiliation
According to the Public Citizen data, pro-crypto candidates emerged victorious in 36 out of 42 primary races where crypto-backed super PACs intervened
One of the top Democrat PACs, Future Forward, agreed a deal with Coinbase Commerce to accept donations via a broad range of digital assets, following on from the Trump campaign’s adoption of the same platform in May
The Crypto4Harris grassroots group also announced at least eight fundraising events across the United States, in an attempt to boost her credibility with the crypto crowd
Co-organiser Amanda Wick told Bloomberg “Our system, sadly, is too often ‘pay to play,’ and many folks in the crypto industry know that, but they’ve been burned by four years of terrible policy under Biden and are reluctant to give until Harris shows signs of a pivot… We are working with the campaign especially hard to get some indication of a pivot before it’s too late and those votes are lost”
On the Trump side of the political spectrum, a crypto project run by his sons Eric and Donald Jr, released more details this week, outlining its purpose in the DeFi landscape
The World Liberty Financial project will heavily feature stablecoin usage within its architecture, as “By spreading US-pegged stablecoins around the world, we ensure that the US Dollar’s dominance continues, securing America’s financial leadership and influence on the global stage”
However, the project has already attracted pre-launch scrutiny for a variety of its tokenomic design choices, including a very high proportion (70%) of proprietary ecosystem tokens reserved for its team and insiders
In the enforcement realm, the CFTC settled for $175,000 with DEX Uniswap Labs over allegations regarding leveraged token sales, and Galois Capital Management paid a $225,000 SEC fine regarding asset custody shortfalls due to FTX accounts
Meanwhile, Japan’s Financial Services Agency (FSA) proposed a major reduction in crypto tax obligations, by bringing them in line with traditional financial assets
The FSA wrote “Regarding the tax treatment of crypto asset transactions, crypto assets should be treated as a financial asset that should be an investment target for the public”
Digital assets will likely be taxed at around 20% from 2025 onwards, rather than the 15% to 55% band possible through their current “miscellaneous income” classification
The FT reported on several significant developments in the stablecoin space this week, highlighting numerous new endeavours from around the world
This includes proposed new stablecoins from Latin America’s leading online marketplace (Mercado Libre), industry firm Paxos, XRP token issuers Ripple Labs, Hong Kong firm IDA, and even the US state of Wyoming
According to the FT “The rush of launches highlights a growing conviction among entrants that crypto will transform everyday payments for consumers”, although it did also feature the prediction that “a lot of them will just burn out”
Ripple told the paper that its new stablecoin will “dramatically improve” cross-border transaction experiences, with CEO Brad Garlinghouse announcing during Korea Blockchain Week “We will certainly launch soon. Weeks, not months. It's called Ripple USD. RLUSD has been minted in that framework… 100% backed by U.S. dollar deposits, short-term U.S. government Treasuries and other cash equivalents“
The FT also revealed that “Hong Kong-based digital asset company IDA raised $6m this week to fund its development of a stablecoin regulated in the territory. Irish payments company DECTA created a Euro-denominated stablecoin last month”
Wyoming legislators meanwhile pushed for more crypto usage in everyday payments, with an additional wider benefit; “the [Wyoming Stable Token] commission plans to invest reserves that back each token in circulation into Treasuries and reverse repos, and use the interest made on those investments to fund its public schools”
Additionally, investment and market making firm DWF Labs announced finalised designs on a “synthetic collateralized stablecoin…[supporting] numerous assets with different annual percentage yields: USDT, USDC, DAI and USDE, Bitcoin and Ether, in addition to some blue chip tokens and "long tail altcoins“
Bankrupt digital asset mining firm Rhodium secured a legal rarity this week; “approval for an unusual debtor-in-possession financing plan on Friday that offers options to borrow in either US Dollars or Bitcoin”
Tech billionaire Mike Novogratz’s Galaxy Digital is offering up to $30m or 500 Bitcoins to cover the company’s Chapter 11 bankruptcy
The proposed loans feature very different rates of repayment depending on the asset chosen; the dollar loan charges 14.5% interest, whilst the Bitcoin-denominated variant charges 9.5%
Rhodium’s bankruptcy was spurred by issued with its Texas-based power supplier Whinstone US; issues which began after Whinstone was acquired by mining rivals Riot Platforms
Hedge fund billionaire Alan Howard is already an established name in crypto circles, through numerous investments via his firms Brevan Howard and BH Digital—and he appears to have set an example for his offspring, as son Daniel has now raised $25m for a new crypto VC fund
New York-based Halo Capital features several alumni (including Daniel Howard) from crypto-centric private equity firm 10T Holdings
Howard said that Halo would invest across a broad range of touchpoints within the wider digital asset space, rather than concentrating on specific blockchains
He told Bloomberg “We hadn’t really seen many venture capital investors in the space with this background of a traditional growth equity fund… [a] great way for us to be value-added investors in the space, but also for us to have an impact, was to be a much more generalist fund focused across the entire ecosystem”
Founding partner Bhavin Vaid added “One thing that we’ve noticed is a lot of the existing funds in the space are potentially just biased, based on other investments they might have made over the past three to five years. Our ability to take a differentiated approach, and a research and data-driven one, is going to be vital”
In other VC news, Robot Ventures raised $75m for its latest digital asset venture fund—around three times the size of its previous funds
The firm concentrates on early-stage investment, and anticipates more presence from traditional finance and real-world assets in the space; co-founder Robert Leshner said “We believe that blockchains aren’t just this island or a singular self-encapsulated bubble for people just to trade crypto. The longer value truly comes from a blockchain being used for more than just crypto native assets”
Zürcher Kantonalbank (ZKB), Switzerland’s fourth-largest (and the world’s second-safest) bank, launched Bitcoin and Ether trading facilities for customers this week, the latest in a long line of digital asset adoption by the alpine nation’s banking industry
In a press release, ZKB head of institutional clients and Multinationals Alexandra Scriba said “When it comes to cryptocurrencies, Zürcher Kantonalbank takes on the critical function of securely storing the private keys. Customers and third-party banks therefore do not need their own wallet and therefore do not have to worry about storing their own private keys. Zürcher Kantonalbank takes care of both”
A new report by Nickel Digital revealed several insights around the growth of digital assets from an institutional perspective, showcasing continued investor interest in the asset class
The report is based on a survey conducted amongst 200 institutional investors located in the US, UK, Germany, Singapore, Switzerland, Brazil and the UAE
26% of respondents “strongly support Bitcoin’s use case as a reserve asset”; and of those already exposed to the asset, 75% believe publicly-listed companies should hold Bitcoin
According to Bitbo data, the amount of Bitcoin held by publicly traded companies grew by almost 200% over the last year, increasing from $7.2bn to roughly $20bn
There remains much potential room for allocation; the amount of Bitcoin currently held by publicly listed companies only represents around 1.6% of its total supply
Additionally, “58% believe that 10% or more of listed companies will hold BTC on their balance sheets in the next five years, and 8% of the survey participants predicted that 25% or more of public firms would add Bitcoin to their balance sheets in the next five years”
Nickel Digital CEO Anatoly Crachilov commented, “Institutional investors and wealth managers are clearly seeing long-term value in having listed companies initiate exposure to digital assets as part of their reserve allocation, thus helping mitigate the risk of currency debasement”