News
16
Jan

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1/16 News roundup: BTC ETF, ETH ETF, Northcrypto, euro stablecoins, hacks

SEC approved all spot Bitcoin ETF applications last week! Speculation on the spot Ethereum ETF started immediately. Northcrypto added Dogecoin to its crypto selection. The Euro-stablecoin market grew slowly in 2023. We also cover a couple of hacking cases from January.

SEC Approves All 11 Spot Bitcoin ETF Applications!

History was made last week in the crypto industry. On Wednesday, the US Securities and Exchange Commission (SEC) approved all 11 open spot Bitcoin ETF applications. Crypto enthusiasts have been waiting for this approval for over ten years!

There have been futures-based Bitcoin ETFs in the US since 2021. However, the spot ETF differs significantly from futures-based ETFs because the spot ETF holds real bitcoins. This means purchasing spot ETF shares creates upward pressure on the Bitcoin price. Read more about Bitcoin ETF in this article: Bitcoin ETF Explained.

SEC and its director, Gary Gensler, have been very anti-crypto since late 2022. Gensler acknowledged that the SEC’s defeat in the legal battle against Grayscale (in August 2023) effectively forced the agency to approve spot ETF applications. Cameron Winklevoss summed up the situation well with this X post.

SEC reluctantly gave its approval, evident from Gensler’s comments last week.

While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin. Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.

The following spot Bitcoin ETFs were approved in the US last week:

NYSE

  • Bitwise Bitcoin ETP Trust (BITB)
  • Hashdesh Bitcoin ETF (DEFI)
  • Grayscale Bitcoin Trust (GBTC)

CBOE

  • ARK 21Shares Bitcoin ETF (ARKB)
  • Fidelity Wise Origin Bitcoin Trust (FBTC)
  • Wisdomtree Bitcoin Trust (BTCW)
  • Invesco Galaxy Bitcoin ETF (BTCO)
  • VanEck Bitcoin Trust (HODL)
  • Franklin Bitcoin (EZBC)

NASDAQ

  • Valkyrie Bitcoin Fund (BRRR)
  • iShares Bitcoin Trust (IBIT)

Grayscale’s Bitcoin Trust has been on the market for a long time, but its structure was converted into an ETF.

Trading of ETFs started immediately on Thursday. The trading volume of the first two days increased to 7.8 billion dollars, and the net value of the funds increased by more than 800 million dollars.

As the table shows, many GBTC owners decided to repatriate their profits, as GBTC fund shares traded at a significant premium throughout the last year.

Why did $7.8 billion in volume result in only $800 million in net growth? This is because professional traders do a lot of day trading in ETF shares, looking for arbitrage and speculating on the popularity of the funds. This creates a lot of short-term buying and selling volume.

Bitcoin’s price barely moved at all on the day of publication. The price started declining on Friday when significant GBTC sales were also seen. In addition, various whale alerts reported large movements of bitcoins in the blockchain. Many large-scale investors decided to cash out their profits from 2023.

In summary, it can be stated that the launch of the ETF was the closest to the “buy the rumor, sell the news” scenario. The market had priced in the approval as expected, and no positive reaction was seen. The longer-term effects will be seen in the coming months and years.

Ethereum ETF to be approved next?

The biggest winner of the spot Bitcoin ETF launch was Ethereum. Ether’s price increased almost the same second the SEC announced that it approved Bitcoin ETFs.

Ethereum has been in decline compared to Bitcoin for over two years. Last week, the ETH/BTC pair saw the so-called “God candle” when Ethereum rose more than 17 percent compared to Bitcoin. The graphic below shows the ETH/BTC ratio with weekly candles.

ethbtc

Ethereum’s price is rising because investors speculate that the SEC will approve the spot Ethereum ETFs next. There are currently seven applications, and the deadline for the approval is in May.

Approval of spot ETFs would bring a lot of legitimacy to Ethereum and end years of speculation in the US about Ethereum’s status (security or not). SEC boss Gary Gensler still hasn’t answered this question.

Futures-based Ethereum ETFs were already launched in October 2023. Although the launch was a flop, it brought the spot ETF much closer. It is difficult for the SEC to reject a spot ETF if the futures are already in the market.

In addition, Grayscale could sue the SEC if it is not allowed to convert its Ethereum fund into an ETF – just like in the case of Bitcoin. The SEC would very likely lose this battle.

We believed that the approval of the spot Bitcoin ETF was practically guaranteed when Blackrock made its application in June 2023. In the case of Ethereum, the situation is not so clear, but the probabilities are strongly in favor of acceptance.

Blackrock CEO Larry Fink also gave his support last week in an interview with CNBC:

I see value in having an Ethereum ETF. These are just stepping stones towards tokenization and I really do believe this is where we’re going to be going.

Blackrock also has a spot Ethereum ETF application pending.

If the SEC doesn’t throw a wrench in the wheels and the regulatory situation remains unchanged, Gary Gensler will have no choice but to accept the spot Ethereum ETF as well. The more likely the market considers this scenario, the bigger the rise in the price of Ethereum will be seen in the coming months!

Northcrypto added Dogecoin to their selection!

The Finnish crypto exchange Northcrypto announced last week that it has added an interesting cryptocurrency to its offering. It is the most famous meme coin on the market, Dogecoin.

This is probably a desired addition, as Dogecoin is a top 10 cryptocurrency by market cap and one of the oldest, still operating, cryptos on the market. Dogecoin was founded back in 2013. It only became hugely popular in the 2020s thanks to Elon Musk.

dogecoin-northcrypto

During the previous bull market, with his X posts, Elon Musk caused drastic price increases for Dogecoin. Many also remember Musk’s appearance on the Saturday Night Live show in May 2021. At that time, Dogecoin reached its all-time high price of $0.74.

2023 was by no means a good year for Dogecoin. At the end of October, Dogecoin’s price was clearly in the red for the year, but its price rise in Q4 ensured that Dogecoin ended up with about +29 % profit for the year. These numbers are far from the profits of, e.g., Bitcoin, Ethereum, or Solana.

One reason for Dogecoin’s quiet period can be found in the direction of Elon Musk. Musk hasn’t tweeted much about DOGE in recent years, and the man’s focus has been (for good reason) on more important issues.

However, it seems that Dogecoin has developed a really strong fan base in the 2020s. Many expected DOGE to fall far from the top 10 positions during the previous bear market, but Dogecoin is still in the top 10 list of cryptocurrencies.

Dogecoin will probably rise during the next bull market like the previous ones because its brand in the meme coin category is so strong. However, it is already such a big currency in terms of market cap that it won’t be one of the biggest movers anymore.

The Bitcoin Center has a clear beginner’s guide on buying Dogecoin if you are interested in investing in this coin.

The market for Euro-stablecoins grew slowly

Next, let’s take a look at the euro stablecoin market. Stablecoins backed by the US dollar (USDT, USDC, DAI, etc.) have dominated the crypto market until now with a market share of almost one hundred percent.

The euro is a major world currency, with many European crypto investors. One could imagine that there would be a demand for euro-stablecoins. It helps users living in the eurozone avoid currency risk.

One problem for adopting euro stablecoins has been the dominance of the US dollar. The euro lost over 20 percent of its value against the dollar in 2021-2022. Although the currency has recovered during 2023, many European investors still prefer to hold dollars rather than euros.

If you want to stay on top of the development of euro-based stable currencies, follow Juuso Roinevirta in X. Juuso works with the Finnish EUROe and updates the euro stablecoin market. Here is the situation at the beginning of January 2024:

In 2023, the Euro-stablecoin market grew modestly by only 20 percent. The market shrank if you removed the largest stablecoin, AEUR. The progress has been, therefore, really weak. A market of less than 300 million is microscopic compared to Tether’s $95 billion market cap alone.

AEUR, launched by the Swiss Anchored Coins AG, was last year’s biggest surprise. It only went public through Binance in December but still amassed a market capitalization of over 70 million euros by the end of the year.

The regulation of stablecoins will change in Europe in the summer of 2024 when the MICAR legislation enters into force. It will likely lead to drastic growth in the euro stablecoin market.

Learn more about stablecoins from this article: The Beginner’s Guide on Stablecoins.

Successful and failed hacking cases

Finally, let’s review a few hacking cases from early January. The hacks of 2024 started on the very first day when the cross-chain bridge Orbit suffered more than 80 million dollars in losses. You can read more about the topic in the previous news roundup.

The SEC’s X account was hijacked

The most talked about case of the past week was the X account of the US Securities and Exchange Commission, SEC. It was hijacked just a day before the official approval of the spot Bitcoin ETF. As you might expect, the hacker posted a genuine-looking message about ETF approval on the account.

sec-tweet

Nowadays, crypto investors are so skeptical that few go for it. The price of Bitcoin rose mainly only based on bots’ purchases. The SEC quickly took over his account and said it was a false alarm.

Interestingly, the hacker would certainly have caused much worse havoc by tweeting about the rejection of the ETF. Bitcoin’s price could have easily collapsed by up to 20 percent quickly.

XRP attack on Bitfinex failed

Yesterday, we saw a rare attack on the XRP Ledger when an unknown party tried to steal lots of XRP tokens from the Bitfinex exchange.

The hacker exploited the known Partial Payments vulnerability in the XRP Ledger. It allows the recipient to be tricked into paying a hugely large transaction, even if it’s a transfer of just a few cents.

If the attack had been successful, the hacker would have theoretically emptied up to 15 billion XRP tokens, i.e., practically all the XRP assets of the Bitfinex exchange. However, Bitfinex’s security settings flagged the transaction as suspicious and did not go through.

Above is Bitfinex CEO Paolo Ardoino’s X post on the subject.

Radiant Capital lost $4.5 million

DeFi lending service Radiant Capital was honored to be the second hack of 2024. On January 2, Radiant Capital lost about 1900 ETH, worth about $4.5 million at the time of the incident.

Radiant Capital is a lending service built on top of the LayerZero protocol. LayerZero makes it possible to build a lending service that combines liquidity between several different DeFi apps that can run on different blockchains. Currently, Radiant operates on the Arbitrum and BNB Chain platforms.

The hacker exploited the vulnerability when Radiant Capital opened a new USDC market on the Arbitrum platform.

As a result of the attack, Radiant Capital temporarily disabled all lending functions on the Arbitrum platform. However, they were reinstated three days later after the audit. The losses suffered by the users remained moderate, and their compensations were processed individually.

AboutBitcoin Team

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