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U.S. spot bitcoin ETFs recorded net inflows of $31 million on Tuesday, after seven consecutive days of net outflows. Since their launch in January, the 11 spot bitcoin ETFs have accumulated a total of $14.42 billion in net inflows. Earlier this week, the price of bitcoin fell below $60,000 before rebounding. The primary reason for this decline appears to be the announcement of the imminent repayment to Mt. Gox creditors.
The current trend of negative news is worrying investors, especially following the stricter stance of the Federal Reserve. Mt. Gox repayments could worsen the situation if creditors decide to sell their Bitcoins, increasing selling pressure on the market. Additionally, Bitcoin miners are also selling their holdings due to decreased mining revenues, exacerbated by a 6% drop in the network’s hash rate. The key support level for Bitcoin’s price is currently at $56,000, a critical threshold to watch according to Julio Moreno from CryptoQuant.
Mt. Gox creditors will start receiving their repayments in Bitcoin and Bitcoin Cash in early July, which has driven the price decline. This announcement has raised fears of massive sell-offs in the BTC and BCH markets, compounded by the liquidation of long Bitcoin positions worth $90.78 million within 12 hours. Mt. Gox, once a leader in the cryptocurrency market, ceased operations in 2014, and the repayment process, which could last until October 2024, involves compliance measures and arrangements with cryptocurrency exchanges to ensure safe repayments. Market participants are concerned about the potential sale of the 141,686 BTC held by Mt. Gox wallets, valued at approximately $8.71 billion. Previous fund transfers had already caused price drops, further fueling market nervousness. However, most experts believe the market is now mature enough to handle even a massive sell-off of Mt. Gox holders’ bitcoins.
VanEck has filed a Form 8-A with the SEC for its Ethereum product, marking a step toward creating a spot Ethereum ETF. This filing allows the necessary registration for the product to be traded on the exchange once approved. This move follows recent amended registration statements filed by other companies seeking to launch Ethereum ETFs, including Grayscale, which aims to convert its Ethereum Trust into an ETF. Last month, the SEC approved Form 19b-4 for eight spot Ethereum ETFs, but the registration statements must still be validated before trading begins. Eric Balchunas, senior ETF analyst at Bloomberg, noted that VanEck’s filing is a standard step in the process, with a similar timeframe observed for previous Bitcoin ETFs, launching seven days after the 8-A filing.
Matt Hougan, CIO of Bitwise, predicts that spot Ethereum ETFs will attract net inflows of $15 billion in their first 18 months after launching in the U.S. This estimate is based on the relative market capitalization of Ethereum and Bitcoin, data from international exchange-traded products markets, and the role of carry trade. Hougan notes that spot Bitcoin ETFs reached $15 billion in net inflows in five months of trading. The SEC has approved Form 19b-4 for eight spot Ethereum ETFs from companies like Bitwise, BlackRock, and Fidelity, but the registration statements must still become effective before trading begins. Hougan anticipates that investors will allocate funds to Bitcoin and Ethereum ETFs in proportion to their market capitalizations, with a weighting of 75% for Bitcoin ETFs and 25% for Ethereum ETFs. Excluding the $10 billion in expected assets from the Grayscale Ethereum Trust at launch, Hougan predicts that spot Ethereum ETFs will reach approximately $15 billion in net inflows, significantly influencing the Ethereum market.
Riot, a Bitcoin mining giant, has abandoned its hostile takeover bid for Canadian company Bitfarms at $2.30 per share. Facing continued opposition from Bitfarms and the implementation of a shareholder rights plan, Riot has decided to withdraw its acquisition offer. However, Riot now plans to replace Bitfarms’ management with directors more favorable to a potential merger, claiming that this combination would create the world’s largest publicly traded Bitcoin miner. Riot currently holds 14.9% of Bitfarms’ common shares, making it the largest shareholder. Riot has called for a special shareholders’ meeting to vote on replacing Bitfarms’ current board with three new members: John Delaney, former mayor of Jacksonville; Amy Freedman, former investment banker and corporate advisor; and Ralph Goehring, an energy industry executive. Bitfarms, whose stock fell nearly 9% following the announcement, said it would review Riot’s shareholder meeting request but accused Riot of negotiating in bad faith. Despite the tensions, Bitfarms might be open to a deal if the proposed price is deemed adequate.
British bank Standard Chartered is opening a spot trading desk for Bitcoin and Ethereum in London, becoming one of the first global banks to enter spot crypto trading. This new desk, integrated into the Forex trading unit, will begin operations soon. Standard Chartered stated that it is working closely with regulators to meet the demand from its institutional clients for Bitcoin and Ethereum trading, aligning with its strategy to support the digital asset ecosystem, including access, custody, tokenization, and interoperability. This initiative marks a significant step for the bank in the digital asset space, following investments in institutional crypto custody and trading companies such as Zodia Custody and Zodia Markets. Other banks, like Goldman Sachs, have previously traded crypto derivatives rather than the assets themselves due to strict regulations. Standard Chartered’s decision to create its own crypto trading desk indicates its intent to deepen its presence in the digital asset sector despite regulatory challenges.
Experts are questioning whether Bitcoin has reached its lowest point in the current consolidation channel, despite several recent negative factors. Dessislava Aubert, an analyst at Kaiko, explains that the Fed’s reduction in rate cut projections has weighed on risk assets, including Bitcoin. Zach Pandl, director of research at Grayscale, asserts that Bitcoin’s fundamentals have remained stable, but the market has been affected by three key factors: outflows from spot Bitcoin ETFs, sales of Bitcoin seized by the German government, and expected sales from Mt. Gox creditors.
Matt Hougan, chief investment officer at Bitwise, compares the situation to “lock boxes” of Bitcoin that, when opened, increase the supply on the market. Alex Thorne, head of research at Galaxy Digital, estimates that 6,500 Bitcoin could be sold if most Mt. Gox investors hold onto their assets, given they are early adopters facing high capital gains taxes. Additionally, Aubert from Kaiko noted increased selling pressure from large Bitcoin holders, such as miners, which could exacerbate market volatility over the summer. However, positive prospects exist, particularly the anticipated approval of spot Ethereum ETFs this summer, which could boost the overall cryptocurrency market. Pandl from Grayscale suggests that these approvals could create a bullish momentum for cryptocurrencies and offer attractive opportunities for long-term investors.
The Rivemont crypto fund remains 100% exposed to bitcoin.
The presented information is as of June 26th, 2024, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
