**Bitcoin Slips to $ 64K as Large Grayscale GBTC Outflows Continue**
Volatility in crypto markets continued Friday, with bitcoin (BTC) tumbling below $ 63,000 at one point from the $ 67,000 area just hours earlier. A modest rebound since has taken the price back to the current $ 64,000, down 3.7% over the past 24 hours.
The sell-off rippled through the market, with the broad CoinDesk 20 Index was lower by 4.4% over the same time frame, led by layer-1 network Solana's token (SOL) declining more than 10% at one point.
It's been more than a week when BTC turned sharply lower from its fresh all-time high price over $ 73,000 and crypto assets entered a corrective period. While Wednesday's steep, 10% rally on the back of a dovish Federal Reserve promised a quick recovery, the price action since suggests otherwise. "[It] will take some time before we take out that $ 73,000 again," said Mike Novogratz, CEO of digital asset investment company Galaxy Digital, during a panel discussion at Bitcoin Investor Day in New York Friday morning.
The weak price action comes as U.S.-listed spot bitcoin ETFs have suffered what's now four consecutive days of net negative flows. To be sure, nearly all the funds continue to see inflows, but each day this week, they've not been nearly enough to offset massive outflows from the Grayscale Bitcoin Trust (GBTC). On Thursday, GBTC saw $ 359 million in outflows, leading to $ 94 million in outflows for the entire fund group. Fidelity's Wise Origin Bitcoin Fund (FBTC) garnered the lowest daily inflow in its history, data compiled by BitMEX Research shows.
So far through the week, the spot ETFs have recorded over $ 830 million outflows, and are on track to endure their second negative week since late January when BTC corrected to $ 39,000.
Analysts at Coinbase Institutional noted that the increased GBTC selling is potentially in part due to Genesis selling shares as part of its bankruptcy process. Once the sales are completed, the report said, inflows to ETFs could pick up again amid favorable macro conditions and favorable central bank policy.
Crypto Billionaire Arthur Hayes and BRC-20 Creator Domo Invest in Bitcoin Ordinals Wallet Oyl’s $ 3M Raise
BitMEX founder and American crypto billionaire Arthur Hayes joined anonymous developer Domo, creator of the Bitcoin BRC-20 token standard, in a $ 3 million pre-seed funding round for Bitcoin Ordinals wallet Oyl.
Crypto asset manager Arca led the round. Other backers include Kanosei and FlamingoDAO.
On launching in the coming weeks, Oyl will offer “in-wallet” Ordinals trading. Ordinals brings NFT functionality to Bitcoin by enabling data inscriptions on individual satoshis. Satoshis are the smaller unit of Bitcoin, like cents are to a dollar.
All kinds of data can go on satoshis, including image, video, audio, and even a very primitive DOOM clone.
Following on from the Ordinals breakthrough, Domo’s BRC-20 token standard brought the ability to create tokens by inscribing data on satoshis.
Similar to the ERC-20 standard used on Ethereum by heavyweights like Tether, Uniswap, Polygon, Chainlink and Shiba Inu, BRC-20 lacks one crucial function of its counterpart: high-functionality smart contracts.
Still, for something that was put out for free by its creator, it’s gaining considerable traction and interest, a testament to the benefits of open-source collaboration, a founding ethos of crypto.
Bitcoin Ordinals And Beyond
Ordinals may become even more important in the Bitcoin network’s post-halving economy. On the halving, which is a quadrennial event that is this year estimated to arrive on April 19, the block rewards for Bitcoin miners get cut by half.
This effectively halves both mining revenues and the issuance of new Bitcoin. Typically, when demand has stayed consistent, as it has through the last three halvings, the price tends to go higher.
This halving looks no different with very high institutional demand for Bitcoin after the January launch of eleven Bitcoin ETFs. The world’s favourite cryptocurrency set a new all-time high of $ 69,255.77 just an hour ago, according to CoinGecko, but it has since pulled back to trade at $ 67,962.06 as of this writing.
Still, Ordinals transaction fees will represent an important alternative revenue stream for miners. They currently account for about 20% of miners revenue.
In the early days of March 2024, Bitcoin NFTs posted $ 168.5 million in sales over a period of seven days. They beat Ethereum NFTs, which posted $ 162 million over the same period.
Outside of Ordinals, Bitcoin nowadays has a booming layer 2 network, helping the blockchain to achieve scale and speed across a variety of applications. These layer 2s help give Bitcoin the functionality of Ethereum, the most commercially important blockchain.
**Ether Tops $ 2.4K as Cathie Wood's Ark, 21Shares Amend Spot ETH ETF Filing**
The updated prospectus brings the spot Ethereum ETF application more "in line" with the recently approved spot BTC ETF prospectus, one analyst noted. Ethereum's native token ether (ETH) jumped above $ 2,400 Wednesday afternoon to a two-week high as asset managers Ark Invest and 21Shares amended their joint spot ETH exchange-traded fund (ETF) filing.
The updated S-1 paperwork filed Wednesday with the U.S. Securities and Exchange Commission (SEC) shows that the ETF would feature a cash creation and redemption mechanism, which that regulatory agency favored for spot bitcoin ETFs that were approved in January.
"Looks like they updated to be only cash creations and some other things that bring it in line with the recently approved spot BTC ETF prospectus," Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, noted in an X post. The document also added a section about possibly staking ether through "one or more trusted third party staking providers," opening the possibility for the fund to lock up some of its holdings and earn rewards.
**Holding Bitcoin in ‘best interest’ of spot ETF issuers — Analyst**
Amid the ongoing hype about the potential approval of a spot Bitcoin
BTC
$ 42,248 exchange-traded fund (ETF) in January 2024, some industry analysts have expressed concerns about some ETF-associated problems, including the issue of backing.
Josef Tětek, a Bitcoin analyst at the hardware crypto wallet firm Trezor, said in December 2023 that spot Bitcoin ETFs may take people further from self-custody and potentially create “millions of unbacked Bitcoin.”
Tětek said that such ETFs could possibly end up in so-called “paper Bitcoin” in one of the bad scenarios.
Tětek’s statement has triggered significant feedback from the community, with many considering such claims as FUD. In contrast, others raised the question of how one would be able to ensure that an ETF issuer actually holds Bitcoin for its clients. Some crypto observers noticed it would be great to see “actual on-chain addresses” published in addition to the issuers’ BTC holdings reports.
It is “unlikely” that ETF administrators would create “unbacked BTC equivalents or misrepresent their backing assets,” according to David Gerard, author of the book and crypto blog Attack of the 50 Foot Blockchain.
“This is regulated finance by well-known entities, and I don’t think unbacked ETF shares is a realistic threat model,” Gerard told Cointelegraph. Gerard didn’t elaborate on whether clients would be able to track BTC holdings by issuers.
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Bloomberg ETF analyst Eric Balchunas compared spot Bitcoin ETFs to gold ETFs, stating that a spot BTC ETF would be very similar.
“Gold ETFs are also ’33 Act grantor ETFs. They have been around for 20 years now. And every day, State Street for gold puts how many tons of gold are being held at the custodian. This will be the same thing,” Balchunas said in an interview with Cointelegraph on Dec. 28. The analyst stated:
“I can’t overstate how by-the-book these asset managers are, okay. Not only do they not want the legal trouble, they wouldn’t ever want the PR blow up if they didn’t actually hold the Bitcoin nor would they totally short Bitcoin if they didn’t buy it.”
Balchunas said that companies like BlackRock or Grayscale are “totally vulnerable” to Bitcoin volatility. “Let’s say they just weren’t buying Bitcoin, sort of like Sam Bankman-Fried style. And all these people had shares in Bitcoin,” the analyst noted, adding:
“Not only are they required, not only is there a huge track record, but it’s in their best interest to hold the Bitcoin [...] They just want to provide the access and make the expense ratio, which is whatever 60 basis points.”
The only thing that might not be interesting in the spot Bitcoin ETFs — in their current most-likely form of cash-create — is that the investor will not get Bitcoin back instead of cash.
“But if you’re the kind of person who wants Bitcoin back, just own it directly,” Balchunas said, referring to self-custody, which is believed to be a significant part of the original vision of Bitcoin by the anonymous creator Satoshi Nakamoto.
“But anybody who owns a mutual fund or an ETF, and collectively they have like $ 30 trillion in assets, nobody wants to touch the underlying,” the Bloomberg ETF analyst stressed.
Despite many industry observers being confident that there’s no reason for ETF providers to misrepresent their BTC holdings in the cash-create model, others are still sure that there is a problem.
“The only way to be certain that ETFs would not lead to any paper Bitcoin claims would be if the ETF shares were redeemable for actual Bitcoin,” Tětek told Cointelegraph.
“But since the proposed ETFs are all cash in, cash out, this won’t be the case, and holders will have to trust without any option to verify,” he added.
**K33 Research: Spot Bitcoin ETF approvals expected in January**
A K33 Research report said SEC approvals for spot Bitcoin ETFs in January are likely “nailed on” amid a flurry of updated S-1 filings from issuers like BlackRock.
The United States Securities and Exchange Commission (SEC) is on track to sanction spot Bitcoin ETFs in early January following progressive talks with issuers over the preferred redemption model for these investment vehicles, according to K33 Research.
Dec. 18 saw a pivot to this cash creates structure from several issuers, including BlackRock and WisdomTree, which both submitted amended applications with the SEC. The updates left the door open for in-kind redemptions should America’s securities watchdog decide to greenlight this alternative.
crypto.news, however, reported that the SEC is likely to favor applications settled on cash creations, which require firms to hold the fiat equivalent of the underlying Bitcoin (BTC) offered via exchange-traded funds.
There was no definitive timeline for approval from the SEC at press time, although ETF experts and crypto proponents expect a favorable decision by Jan. 10. Coincidentally, this is also the decision deadline for ARK Invest’s spot Bitcoin ETF jointly filed with 21Shares.
Speculators have also debated the possible impact of a spot Bitcoin ETF on BTC’s price and the broader cryptocurrency market by extension. On one hand, institutional players like Mike Novogratz and Bitwise predict billions of inflows into BTC followed by a run above the token’s $ 69,000 all-the-time set in November 2021.
Conversely, analysts at JPMorgan Chase, America’s largest bank, opine that Bitcoin ETFs are exaggerated. The bank’s researchers predict that spot Bitcoin ETFs would redirect capital already deployed toward other BTC operations and investment strategies such as mining.
**Cristiano Ronaldo sued for promoting Binance, unregistered securities**
Pro-soccer star Cristiano Ronaldo has been hit with a proposed class-action lawsuit from plaintiffs claiming they suffered losses from his promotion of the now-legally embroiled crypto exchange Binance.
A Nov. 27 filing to a United States district court in Florida claimed Ronaldo “promoted, assisted in, and/or actively participated in the offer and sale of unregistered securities in coordination with Binance.”
Binance entered a multiyear partnership with Ronaldo in mid-2022 to promote a series of his own nonfungible tokens (NFTs), with at least three of the soccer star’s collections tied to Binance.
The complaint claims users who signed up for Ronaldo’s NFTs were more likely to use Binance for other purposes, such as investing in what they claim are unregistered securities.
“Ronaldo’s promotions solicited or assisted Binance in soliciting investments in unregistered securities by encouraging his millions of followers, fans, and supporters to invest with the Binance platform.”
Ronaldo was a key part of Binance’s growing popularity due to his influence and reach, with 850 million followers across social media, says the complaint. They allege his NFT sales were “incredibly successful” at promoting the exchange, with a 500% increase in searches for Binance the week following the initial sale. The suit alleges Ronaldo knew or should have known “about Binance selling unregistered crypto securities,” as he has “investment experience and vast resources to obtain outside advisers.”
Related: Why Binance’s US plea deal could be positive for crypto adoption
The suit cited U.S. Securities and Exchange Commission (SEC) guidance warning celebrities of the need to disclose payments received for promoting cryptocurrencies, which the complaint claims Ronaldo didn’t do.
The class-action lawsuit plaintiffs are Michael Sizemore, Mikey Vongdara and Gordon Lewis, who seek damages and funds to cover legal fees.
Meanwhile, Binance and its founder Changpeng “CZ” Zhao are facing their own legal woes, pleading guilty and paying a $ 4.3 billion settlement to the U.S. government for violations of Anti-Money Laundering laws and running an unregistered money-transmitting business.
Zhao has stepped down as CEO and faces up to 18 months in prison. Binance has agreed to up to five years of compliance monitoring by the U.S. Department of Justice and the Department of the Treasury.
The SEC has also sued Binance, claiming — among other charges — that it sold unregistered securities and is reportedly investigating if Binance misappropriated customer funds.
**BlackRock's Ethereum ETF Plan Is Confirmed in Nasdaq Filing**
BlackRock wants to create an ETF that holds Ethereum's ether (ETH), a plan that deepens the world's largest asset manager's commitment to cryptocurrencies.
Following the news, ETH's price surged to its highest level of the day near $2,100, up about 3% versus just before the filing came out. It later gave back about half that gain, though it remains up about 9% versus 24 hours earlier. The company's plan was revealed in a filing by Nasdaq, the U.S. exchange where BlackRock will seek to list the product – which will need regulatory approval. Earlier Thursday, it emerged that the corporate entity "iShares Ethereum Trust" had been registered in the state of Delaware; iShares is the name of BlackRock's ETF division. BlackRock has already made waves in crypto by seeking to list a bitcoin ETF, the sort of easy-to-trade product that could dramatically broaden access to crypto to average investors. CEO Larry Fink has become a vocal supporter of crypto, reversing his previous skepticism.
**US Treasury sanctions Gaza-based crypto operator allegedly tied to Hamas**
According to the U.S. Treasury, federally designated terrorist groups including Hamas, ISIS and an al-Qaeda affiliate used the Buy Cash Money and Money Transfer Company to transfer funds. The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury has sanctioned a crypto operator allegedly connected to the Palestinian militant group Hamas.
In an Oct. 18 notice, OFAC announced sanctions for Hamas operatives and financial facilitators following the group’s attack on Israel. The entities added to OFAC’s list of specially designated nationals included a “Gaza-based virtual currency exchange and its operator” with a Bitcoin
BTC
$28,230 wallet address.
According to the Treasury Department, the sanctions were aimed at “root[ing] out Hamas’s sources of revenue” following an Oct. 7 attack that resulted in the deaths of many Israelis. The exchange using digital currency, named Buy Cash Money and Money Transfer Company, is operated by Gaza resident Khan Yunis — with the Treasury alleging that both the firm and Yunis were “linked to Hamas”. Ahmed M.M. Alaqad, the owner of the business, was also named in the sanctions.
“We will continue to take all steps necessary to deny Hamas terrorists the ability to raise and use funds to carry out atrocities and terrorize the people of Israel,” said Treasury Secretary Janet Yellen. “That includes by imposing sanctions and coordinating with allies and partners to track, freeze, and seize any Hamas-related assets in their jurisdictions.”
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