Potential Inflows of $14.4 B for BTC Spot ETFs

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The Blends Briefs
TL’DR: Here’s a sneak peek into today’s newsletter

• The Bitcoin price is selling off as FUD

• ARK Invest continues to sell Coinbase and GBTC for the second day

• $500,000 of ETH stolen through Maestro bot

• The Crypto Winners of the Week

• Bitcoin Spot ETFs Could See Inflows of $14.4B in First Year

• DeFi products for Islamic Finance

• Nigeria has witnessed a 9% increase in cryptocurrency adoption

• Bitcoin Bearing

A must-have
Short-Sellers Lose Big as Bitcoin Breaks Through $34K Resistance

The Bitcoin (BTC) price is selling off as FUD (fear, uncertainty and doubt) spreads around the market that spot Bitcoin Exchange Traded Fund (ETF) approvals might not be as close as previously thought.

A spot Bitcoin ETF is a type of investment vehicle that would track the price of the underlying asset, in this case, bitcoins, and allow investors to buy and sell them on a regulated exchange. Unlike futures-based Bitcoin ETFs, which trade contracts that promise to deliver bitcoins at a later date, spot Bitcoin ETFs would involve the actual ownership and custody of the cryptocurrency.

Many investors and analysts believe that a spot Bitcoin ETF would boost the adoption and legitimacy of Bitcoin, as well as increase its liquidity and price stability. However, the US Securities and Exchange Commission (SEC) has not approved any such product yet, citing concerns over market manipulation, fraud and investor protection.

Market manipulation is a deliberate attempt to influence the value of assets and interrupt a market trend. In crypto manipulation, bad actors create illusions to inflate or deflate the market prices to snatch up profits. An analysis by Forbes from 2021 found that 51% of Bitcoin trading volume on exchanges was fraudulent. Moreover, some researchers have claimed that the 2017 Bitcoin bull run was driven by a single whale who manipulated the price through a crypto exchange called Bitfinex. However, these claims have been refuted by industry experts who argue that there is no evidence of such collusion and that Bitcoin's price movements are driven by supply and demand dynamics.

BTC dipped 3% from around $34,500 to around $33,500 in minutes following the removal of BlackRock’s iShares Bitcoin Trust ticker $IBTC from the US Depository Trust & Clearing Corp.’s (DTCC) list on its website, which was first flagged on X by Barron’s journalist Joe Light.

This move sparked speculation that BlackRock, the world's largest asset manager, had withdrawn its application for a spot Bitcoin ETF, which would have been a major milestone for the industry. However, BlackRock later clarified that it had not filed for such a product and that the ticker was reserved for a potential future offering.

Global Biscuits

ARK Invest continues to sell Coinbase and GBTC for the second day.

For the second consecutive day, Cathie Wood's ARK Invest has divested its holdings in the Grayscale Bitcoin Trust (GBTC) and Coinbase (COIN), with approximately $1.8 million and $1.7 million in sales, respectively. This decision coincides with the cryptocurrency market reaching highs not seen since early 2022. ARK's Next Generation Internet ETF disclosed the sale of 21,062 COIN shares and 72,509 GBTC units as Tuesday's market closed for the second day on raw, after selling $5.8 Million in Coinbase Stocks and GBTC Shares on Monday as bitcoin price climbed.

$500,000 of ETH stolen through Maestro bot

Earlier today, Maestro, one of the largest projects on Telegram, experienced a significant security breach, resulting in a theft of more than 280 ETH (equivalent to $500,000) from user accounts. The breach was due to a critical vulnerability in the Router2 contract, which is responsible for managing logic related to token swaps. The vulnerability allowed unauthorized transfers of assets, with the stolen funds being sent to the cross-chain exchange platform Railgun in an attempt to obscure their source.

Maestro responded promptly to the breach by replacing the Router2 contract's logic with a benign Counter contract, freezing all router operations and preventing further unauthorized transfers. The team has resolved the vulnerability and is conducting an internal review. While the security incident is under investigation, tokens in pools on platforms like SushiSwap, ShibaSwap, and ETH PancakeSwap remain temporarily unavailable. The team has also committed to refunding affected users.

The Crypto Winners of the Week

This week's crypto market rally saw several notable altcoins making significant moves. Here are the winners:

• MINA (Mina Protocol's native token) surged by almost 120% in a day, reaching $0.92 but has cooled since. MINA's rise was fueled by its listing on South Korea's Upbit exchange, becoming the largest trading pair in Korean fiat currency.

• INJ (Injective Protocol's native token) increased by 51% over the week.

• PEPE, a meme coin, experienced a 57% surge.

• LINK (Chainlink's native token) saw a 50% rise in the same period.

• RUNE (THORChain's native token) posted a significant 41.3% growth.

Bitcoin Spot ETFs Could See Inflows of $14.4B in First Year

According to a recent research note from Galaxy Digital, the introduction of Bitcoin spot exchange-traded funds (ETFs) could potentially lead to significant inflows, with an estimated $14.4 billion in the first year of issuance. The report suggests that Bitcoin ETFs could be a more attractive investment vehicle than existing products like trusts and futures, which collectively hold over $21 billion in value. Inflows into these ETFs could grow to $27 billion in the second year and $39 billion in the third year. The report also highlights the vast potential of the U.S. wealth management industry, which represents a sizable market for these accessible Bitcoin investment options.

The demand for Bitcoin ETFs has the potential to significantly impact Bitcoin's price, with a predicted 74% jump in the first year, given the liquidity and price impact of billions of dollars in investments. The research emphasizes that current investment products come with significant drawbacks, including high fees, low liquidity, and tracking errors, making them inaccessible to a broader investor base. Bitcoin spot ETFs are expected to offer greater efficiency through lower fees, improved liquidity, and more precise price tracking, attracting a wider range of investors seeking direct exposure to Bitcoin. Currently, there are 12 Bitcoin spot ETF applications pending approval by the U.S. Securities and Exchange Commission, with numerous financial institutions vying to enter this market.

Tastes of the regions

DeFi Products for Islamic Finance.

At the Future Blockchain Summit in Dubai, iChain and ISLAMICOIN unveiled blockchain-based solutions designed to reshape the landscape of Islamic finance. The core mission of these platforms is to provide secure, transparent, and Shariah-compliant financial services to Muslims globally. iChain introduces features like Consensys permissions for contract deployment, ensuring security, and enabling accessible transactions. The key projects include ISLAMICOIN, a halal cryptocurrency for secure digital transactions, iGold, a digital asset backed by physical gold, iQrad, an Islamic loan solution for small businesses; and ISLAMIwallet, a versatile crypto wallet with enhanced security and peer-to-peer services.

Nigeria has witnessed a 9% increase in cryptocurrency adoption, with Bitcoin and Tether's USDT stablecoin being particularly popular. Nigeria is among six countries globally where transaction volume has risen in the past two years. The country's fiat currency, the Naira, has lost 65% of its value against the US dollar, leading households and businesses to turn to stablecoins and Bitcoin as a means to preserve wealth and facilitate transactions. Stablecoins, in particular, are viewed as a way to hedge against local currency depreciation. Binance, with its ease of access to USDT and cryptocurrencies, has played a significant role in this trend.

Local businesses have also adopted USDT and stablecoins for payment processing, while tour operators are increasingly quoting packages in US dollars and offering USDT as a payment option. The Central Bank of Nigeria's decision in 2021 to prohibit commercial banks from servicing crypto exchanges drove crypto trading toward peer-to-peer platforms like Binance. As a result, the Binance P2P exchange has become a parallel currency market alongside traditional ones.

Dictionomics
Word of the day… Bitcoin Bearing

Bitcoin Bearing

Bitcoin bearing is a term that refers to the act of betting against the price of Bitcoin, expecting that it will decline. Bitcoin bearers borrow Bitcoin from a lender and sell it on the market, hoping to buy it back later at a lower price and return it to the lender, keeping the difference as profit. However, this strategy is very risky because if the price of Bitcoin rises instead of falling, the bearers will have to buy back the Bitcoin at a higher price, resulting in losses.

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