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It’s now as clear as it can be! Bitcoin has officially surpassed its all-time high and is now trading well above $70,000. We are entering the most exciting phase of any market, which is the price discovery phase with no past resistance existing.
There is no doubt that the resounding success of exchange-traded funds (ETFs) in cash has strongly stimulated the current bullish market. Just yesterday, net inflows into these products exceeded one billion dollars, setting a significant record. Among these funds, Blackrock’s IBIT product stood out with a record inflow of $849 million. According to data provided by BitMEX Research, this day saw a total of 14,706 BTC in terms of net inflows. Should we remind that only 900 bitcoins are created each day? Or that this total will be halved in a few weeks? These figures reflect an unprecedented day for the recently approved spot Bitcoin exchange-traded funds in the United States, capturing more than 90% of the market share of daily transaction volumes among ETFs offering exposure to Bitcoin. In contrast, Bitcoin futures ETFs now only represent 10% of this market share.
Since January 11, 2024, total net inflows into Bitcoin ETFs have reached $4.1 billion. The spot Bitcoin ETFs have met undeniable success, far exceeding the most optimistic expectations, with inflows of more than $10 billion in just two months. This success can be explained by several factors, including an increase in the sales efforts of issuers, their integration into wealth managers’ product offerings, and the normalization of GBTC outflows.
The current surge illustrates the rapid evolution of this digital currency often compared to digital gold. This remarkable breakthrough has allowed Bitcoin to surpass the market capitalization of silver, thus consolidating its position as a digital safe-haven asset. This rise occurred after Bitcoin surpassed $70,000 for the first time on a Friday afternoon. This performance is even more significant as it comes after Bitcoin surpassed the valuation of large companies such as Tesla and Berkshire Hathaway just three months ago, establishing itself as the eighth-largest global asset with a capitalization of $1.4 trillion. Bitcoin remains behind giants like Microsoft and Apple, but for how long?
Since its transformation in January, simultaneously with the launch of nine other ETFs, Grayscale’s share in the spot Bitcoin ETF market has dropped below 50% for the first time since these products began trading in the United States on January 11. As of March 12, the assets under management of the Grayscale Bitcoin Trust (GBTC) have regressed to $28.5 billion, representing 48.9% of the $56.7 billion managed in total by the ten American Bitcoin ETFs. Initially, the Grayscale fund constituted about 99.5% of the total asset management on the first day of ETF trading. The continuous withdrawals from GBTC, which amounted to an average of $329 million per day the previous week, have significantly reduced its market share. Although a decrease in fund outflows was noted at the end of January, new waves of withdrawals were observed in February following the authorization given to Genesis to liquidate approximately $1.3 billion in GBTC shares. However, the increasing influx of funds into BlackRock’s (IBIT) and Fidelity’s (FBTC) Bitcoin ETFs has injected optimism, with these two products attracting $16.9 billion in inflows since their launch.
To counter this trend, Grayscale recently filed an S-1 form with the U.S. Securities and Exchange Commission to launch a new “mini” version of its Grayscale Bitcoin Trust (GBTC), named Grayscale Bitcoin Mini Trust. This new product, which will be listed under the symbol “BTC” on the New York Stock Exchange, is designed as a derivative version of the original GBTC. GBTC shareholders will be allocated shares of the new mini trust at no additional cost or need for specific action on their part, following the contribution of a certain amount of bitcoin to the mini trust by GBTC.
In this fierce competition to stand out, VanEck has decided to temporarily waive management fees for its spot Bitcoin ETF. Kyle DaCruz, director of digital assets at VanEck, highlighted this approach as a means to attract more investors to Bitcoin. According to the prospectus, VanEck will waive management fees for the first $1.5 billion of fund assets until March 31, 2025. Beyond this date or asset threshold, the fees will be 0.20%. Before this announcement, VanEck had set its ETF fees at 0.25%, while BlackRock and WisdomTree were charging 0.2% and 0.5%, respectively. With more than $13 billion under management, BlackRock’s iShares Bitcoin ETF dominates the market, but VanEck is seeking to increase its attractiveness by joining other players like Bitwise and Ark 21 Shares, which have also launched their fee-free ETFs.
MicroStrategy has recently acquired an additional 12,000 Bitcoins, bringing its war chest to 205,000 BTC, a reserve valued at approximately $14.7 billion at the current Bitcoin price. This accumulation places the software company far ahead of all other publicly holding Bitcoin companies, surpassing the total of the other 44 companies listed on Bitcoin Treasuries, including publicly traded Bitcoin miners, electric vehicle manufacturers like Tesla, cryptocurrency exchange platforms such as Coinbase, and payment companies, particularly Block, Inc. led by fervent Bitcoin supporter Jack Dorsey. Michael Saylor, founder and CEO of MicroStrategy, expresses a long-term commitment to Bitcoin, planning to hold these assets for 100 years, seeing it as a strategy of resilience against market fluctuations.
Taking inspiration from the strategy successfully used by Michael Saylor of MicroStrategy, Coinbase is considering raising $1 billion through an issuance of convertible bonds. This financing method allows Coinbase to avoid dilution of its existing shares, thus protecting the interests of its current shareholders. By integrating capped call transactions, Coinbase aims to minimize the impact of dilution upon future conversion of the bonds into shares, a precaution that MicroStrategy did not take in its own issuances. These operations aim to secure value for current shareholders, even if the stock price exceeds the conversion price. The announcement of this fundraising comes in a context of a strong rise in Bitcoin, reflecting a significant increase in Coinbase’s value alongside.
The long-awaited Ethereum upgrade, called Dencun, will be deployed in less than 24 hours. Developers anticipate a significant reduction in gas fees for Ethereum scaling networks, with estimates suggesting a reduction of up to 75%. The name Dencun results from the merger of two previous upgrades, Cancun and Deneb. It is crucial for users to know that no action is required on their part during this upgrade and to remain vigilant against any communication suggesting otherwise. This upgrade introduces proto-danksharding, a major innovation aimed at reducing transaction fees and increasing processing speed on the network, thus marking a turning point in Ethereum’s operation. This could enhance Ethereum’s appeal to startups, potentially enriching its already thriving DeFi ecosystem. In addition, the update implements key Ethereum Improvement Proposals (EIPs), like EIP-7044, which enables programmable withdrawals for staking, offering more flexibility and security to validators and staking participants, an essential element for maintaining the network’s integrity and efficiency.
Conversely, Eric Balchunas, senior ETF analyst at Bloomberg, expresses reservations about the chances of approval for an Ether ETF, estimating them at only 35%. The SEC’s silence, which persists 73 days before the decisive deadline for Ether ETFs, is interpreted as an unfavorable sign. The absence of exchanges between the SEC and issuers, necessary to make adjustments or organize meetings, is especially alarming. Moreover, SEC Chairman Gary Gensler’s perception of Ether as a security rather than a commodity similar to Bitcoin could contribute to this reluctance. After facing negative reactions following the approval of spot Bitcoin ETFs and the SEC’s defeat against Grayscale in August 2023, Gensler might be unwilling to approve an Ether ETF, thus maintaining a regulatory caution that differs significantly from the previous optimism associated with Bitcoin ETFs.
According to the global investment firm AllianceBernstein, Bitcoin is on track to reach $150,000 per unit, a prediction bolstered by recent all-time high price levels and massive capital flows into the newly approved exchange-traded funds. Having anticipated last year that Bitcoin would reach this threshold by 2025, the firm is now even more confident in this forecast, seeing the growing adoption of Bitcoin in traditional asset portfolios as a positive sign. Analysts Gautam Chhugani and Mahika Sapra from Bernstein noted that inflows into Bitcoin ETFs since their launch in January already exceed expectations, with $9.5 billion in 40 days of trading. The increasing popularity of Bitcoin ETFs, which facilitate investment in Bitcoin without the concerns associated with asset storage, suggests greater adoption and future valuation. Furthermore, Bernstein suggests that investing in Bitcoin mining company shares could also offer good returns, anticipating an increase in Bitcoin’s value as more institutional investors and traditional funds gain exposure through ETFs.
The Rivemont crypto fund has, of course, remained fully exposed to Bitcoin this week again.
The presented information is as of March 13th, 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.
