Tag: bitcoin

Bitcoin ETF discounts reach records after late-day selloff

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Prices of some of the biggest spot-Bitcoin exchange-traded funds closed Tuesday at their largest discounts to the value of their underlying assets since they were launched.

While that type of dislocation is typically a troubling sign for an ETF, the chief investment officer of one issuer called it “more an accounting quirk than a real issue” due to the unusual way in which the funds track the value of their assets.

The discounts appeared in closing data after the cryptocurrency sank to a two-month low on Tuesday, including a dip of about 2% between 3 PM and 4 PM New York time, which is the hour in which average prices are used to track the value of the ETFs’ Bitcoin.

The $16 billion iShares Bitcoin Trust on Tuesday closed about 1.7% below its net asset value — the largest dislocation since it began trading in January, according to data compiled by Bloomberg. The $9 billion Fidelity Wise Origin Bitcoin Fund (FBTC) saw a 1.1% discount while the $2.5 billion ARK 21Shares Bitcoin ETF (ARKB) and the $2 billion Bitwise Bitcoin ETF (BITB) both closed with discounts of more than 1.4%, also the biggest on record for each.

Tuesday was the last day of the month, which is a common time for investors to rebalance portfolios, especially around the 4 PM closing auction in the stock market. The largest Bitcoin ETFs saw heavy selling pressure near the equity market close, reaching a peak during the time leading into the closing auction, according to Teddy Fusaro, president of Bitwise. The ETFs calculate net-asset value using a 60-minute time-weighted average price for Bitcoin, which can lead to differences between market prices and NAV during large price moves in the last hour of the day, as was the case yesterday, he added.

“We expect such dislocations during periods of high volatility to be common and brief, often occurring in the last few minutes of trading,” Fusaro said. Earlier during Wednesday’s trading session, he added, “all ETFs are trading within a few basis points of their estimated NAV during today’s session. We expect that all of these ETFs will trade at slight premiums and discounts to NAV depending on market conditions and whether or not there is net buying or selling in the marketplace.”

His colleague Matt Hougan, chief investment officer at Bitwise, wrote in a post on X that since the premium and discount figures are based on average prices between 3 p.m. and 4 p.m. in what’s known as the CF benchmark reference rate, it is “more an accounting quirk than a real issue. A better measure of tracking is to chart a Bitcoin ETF vs. the spot price of Bitcoin and see how closely they match.”

Still, the discounts underscore how Bitcoin’s volatility may pose more-complex issues to ETF investors than funds focused on traditional financial assets. At the same time, the volatility creates profitable opportunities for specialized trading firms known as authorized participants who are tasked with keeping the price of the funds in-line with their net asset values.

“We remain confident that the inherent underlying volatility of crypto as an asset class will drive sustained elevated opportunities in crypto ETFs,” Virtu Financial Inc. Chief Executive Officer Douglas A. Cifu said on a conference call last week to discuss the company’s earnings, which included record performance in crypto market-making operations.

Expectations for fund flows were exceeded after the ETFs were launched as the cohort broke one record after another in the more-than $8 trillion US industry. Hopes remain high that more institutions will adopt spot-Bitcoin ETFs as they establish a track record.

“It’s possible it stays at a discount if Bitcoin continues to slide, but that remains to be seen,” said Mohit Bajaj, director of ETFs at WallachBeth Capital.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin recovers after briefly plunging below $60,000 amid global concerns over Iran-Israel conflict

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The cryptocurrency market witnessed a significant downturn on Friday, April 19, with Bitcoin declining below the $60,000 mark amid heightened concerns over geopolitical instability.

Reports of an Israeli missile strike on Iran triggered a rush out of risky assets, sending shockwaves through digital currency markets.

Bitcoin experienced a sharp decline of more than 5.5%, tumbling to $59,961, while Ether, the second-largest cryptocurrency by market capitalisation, mirrored the trend with a similar percentage drop, falling below the $3,000 threshold to $2,895.

The cryptocurrency market dropped suddenly as the US dollar gained strength, making the sell-off in cryptocurrencies worse.

However, Bitcoin recovered the losses to trade above $64,000 level on Friday after reports suggested limited damage from an Israeli strike on Iranian military targets, according to Coindesk.

According to ABC News, Israeli missiles targeted a site in Iran, as confirmed by a US official, escalating tensions following a recent drone strike by Iran on Israel.

The geopolitical turmoil intensified further with reports from Iran’s Fars news agency of an explosion heard at the airport in the city of Isfahan.

The news of military actions between Iran and Israel has reignited concerns among investors, prompting a flight to safety and triggering a sell-off in riskier assets, including cryptocurrencies.

The volatile nature of digital currencies has once again come to the forefront as geopolitical events continue to put influence on market sentiment and prices. As investors closely monitor developments in the Middle East, the cryptocurrency market remains under pressure, with uncertainties looming over its short-term outlook.

Analysts anticipate heightened volatility in the coming days as geopolitical tensions continue to unfold, underscoring the interconnectedness between global events and digital asset prices.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bhutan to upgrade Bitcoin mining in Himalayas as ‘halving’ looms

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bhutan’s investment arm and Bitdeer Technologies Group are planning to ramp up their Bitcoin mining operation to help offset the revenue impact of an upcoming event known as the halving.

The partnership between Druk Holding & Investments and Nasdaq-listed crypto mining firm Bitdeer aims to invest in boosting Bhutan’s mining capacity sixfold through the introduction of cutting-edge hardware.

The planned upgrades will increase the Himalayan kingdom’s mining capacity by 500 megawatts by the first half of 2025, Matt Linghui Kong, chief business officer at Bitdeer, said in an interview. That would bring Bhutan’s total capacity to 600 megawatts.

The capital will be drawn from a $500 million fund that the pair began raising in May last year, when they unveiled plans to leverage Bhutan’s abundant hydroelectric power for Bitcoin mining. Kong said he expects to close the fund by July.

Reduced Rewards

Bitcoin miners operate power-hungry computers that secure the blockchain, earning new tokens as a reward. These rewards are programmed to be cut in half every four years, part of the process of capping the total supply of the original cryptocurrency at 21 million coins.

The upcoming halving in April will see mining rewards slashed from 6.25 to 3.125 coins per block.

DHI and Bitdeer said they are confident they can maintain operational efficiency even if the price of Bitcoin declines post-halving. Bitdeer has one of the lowest costs per Bitcoin mined in the industry at $20,000 per coin, Kong said.

Some miners went bankrupt during the crypto rout of 2022, when a combination of soaring energy costs and Bitcoin’s price falling below $16,000 proved a stern test of the sector’s durability.

Bitcoin Rally
The 140% Bitcoin rally over the past 12 months brought much needed relief to firms that survived, which are once again splashing cash on hardware upgrades and capacity expansion. The digital asset was trading at $68,581 as of 7 a.m. in Sydney on Friday.

Computing costs are rising due to a surge in Bitcoin’s mining difficulty, a measure of how much computing power is needed to add a new block to the network. Network difficulty has hit record highs ahead of the halving, offsetting some of the gains from the price rally’.

Ujjwal Deep Dahal, chief executive officer at DHI, said the nation’s 500-megawatt boost “will be built on Bitdeer’s latest hardware to lower costs and improve computing power.”

Singapore-based Bitdeer, controlled by Chinese entrepreneur Jihan Wu, is one of the top crypto miners by compute power globally and runs one of the largest facilities in Texas.

Sandwiched between China and India, Bhutan has long sought to diversify its hydropower-reliant economy. DHI, which manages the government’s diverse investments, sees blockchain technology as a core part of efforts to build “an innovation ecosystem for a startup economy.” The investment outfit has been experimenting with asset tokenization and is also building out “Bhutanverse,” a metaverse project.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin sinks on ebbing Fed rate cut bets and cooling ETF demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin sank amid cooling demand for dedicated US exchange-traded funds and ebbing bets on looser Federal Reserve monetary policy.

The digital asset fell as much as 5.3% before paring some of the drop to change hands at $66,735 as of 1:10 PM Tuesday in Singapore. Tokens earlier favored by the meme crowd such as Pepe and dogwifhat also slumped, consigning a gauge of smaller digital assets to its biggest two-day slide in about two weeks.

This year’s steep crypto rally is losing steam as lingering US price pressures lead investors to curb wagers on Fed interest-rate cuts, lifting Treasury yields and the dollar. That’s a more difficult backdrop for speculative corners of global markets such as the digital-asset sector.

The changed views about the Fed are having an impact “across crypto, where there has been a selloff as the week gets underway — no sector is unaffected, especially those where prices have outperformed Bitcoin over last six months, for example memes,” said Stefan von Haenisch, head of trading at OSL SG Pte.

Bitcoin has shed about 10% since hitting a peak of $73,798 in mid-March. A flood of daily inflows into US spot-Bitcoin ETFs has eased, weighing on the largest digital asset. On Monday, investors pulled a net $86 million from the batch of 10 products, which have attracted about $12 billion since going live on January 11, according to data compiled by Bloomberg.

The crypto market looked “weak” over the past 12 hours in the wake of the latest US economic data, said Richard Galvin, co-founder of DACM.

The figures showed that US manufacturing unexpectedly expanded for the first time since September 2022 and input costs climbed. Following the report, the amount of Fed easing priced into swap contracts for this year slid to around 65 basis points — less than forecast by policymakers.

The supply of new Bitcoin tokens is set to halve this month, a four-yearly event some traders view as a prop for the cryptocurrency. Others argue further gains will be hard to come by given the token has quadrupled since the start of 2023.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin set for one of the worst weeks in 2024 as ETF demand falters

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin has peeled back more than 10% from its all-time high as the appetite for fledgling spot Bitcoin exchange-traded funds moderates. JPMorgan Chase and Co. strategists warned the retreat has room to run.

The group of 10 spot Bitcoin ETFs just notched its biggest three-day outflow since the products debuted on January 11. Meanwhile, the world’s largest cryptocurrency is set for one of its worst weeks of the year after a 4% retreat. The token changed hands at $65,415 as of 6:57 AM on Friday in Singapore.

Bitcoin “still looks overbought,” JPMorgan strategists said, renewing a February call for further declines leading up to April’s highly-anticipated halving event, which will lower the supply of newly minted Bitcoin from miners.

Sustained open interest in CME Bitcoin futures along with declining ETF flows are significant bearish signals for the price of Bitcoin, the strategists led by Nikolaos Panigirtzoglou wrote in a note Thursday.

“The pace of net inflows into spot Bitcoin ETFs has slowed markedly, with the past week seeing a significant outflow,” the strategists wrote. “This challenges the notion that the spot Bitcoin ETF flow picture is going to be characterized as a sustained one-way net inflow. As we approach the halving event this profit taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.”

Last month, the bank predicted that the price of Bitcoin will drift down toward $42,000 after April as “Bitcoin-halving-induced euphoria subsides.”

Despite Bitcoin setting a record of almost $73,798 on March 14, enthusiasm among retail traders may be waning, according to Naeem Aslam, chief investment officer at Zaye Capital Markets.

“The fact that the rally didn’t really take off from the all-time high like before made many question the strength of the rally,” Aslam said. “The halving is almost here and if this event fails to really keep the momentum going, then it means that we are going to face serious retracement, which means that the price could fall below $50,000.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

El Salvador to transfer ‘big chunk’ of bitcoin to physical vault

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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El Salvador will transfer “a big chunk” of its bitcoin assets to an offline device that will be stored in a physical vault within the Central American country’s territory, President Nayib Bukele said on Thursday.

“We’ve decided to transfer a big chunk of our Bitcoin to a cold wallet, and store that cold wallet in a physical vault within our national territory,” Bukele, who last month was re-elected to a second term as president, said in a post on X. “It’s not much, but it’s honest work.”

According to Bukele’s social media account earlier this week, El Salvador’s bitcoin portfolio is just under $205 million, logging some $83 million in profit.

The true size of the holdings remains unclear, but a recent rally in bitcoin values has reignited interest in the world’s largest, if volatile, cryptocurrency.

Bitcoin on Thursday hit a record high of $73,800.

In September 2021, El Salvador became the first country in the world to establish bitcoin as legal tender, earning it harsh criticism. One of the strongest critics was the International Monetary Fund, which has been negotiating a large loan with the cash-poor country.

Bukele has also sketched plans for a tax-free crypto haven powered by geothermal energy from a volcano. As he prepares to enter his second term as president, ground has yet to be broken on this so-called Bitcoin City.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Memecoin trading at levels last seen before crypto bubble burst

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The memecoin frenzy in the digital-asset market shows no signs of stopping, with trading volumes now at levels last seen just before the burst of the last crypto bubble more than two years ago.

Considered as some of the most speculative and volatile cryptocurrencies, memecoins such as Dogwifhat and Pepe are far outstripping the gains registered by market bellwether Bitcoin that has dominated the headlines. Trading volume for the top memecoins, which often trade for a fraction of a cent, reached nearly $80 billion in the past week, according to data compiled by blockchain data firm Kaiko. That’s the highest since October 2021.

“Historically, a surge in meme tokens has often signaled a market top,” Dessislava Aubert, research analyst at Kaiko, said. “However, it is difficult to predict whether this will continue to be the case now as new capital is entering the crypto markets. We also observe that some of these tokens are increasingly driven by idiosyncratic factors and are less correlated with Bitcoin.”

Pepe, a frog-themed coin, and dogwifhat — a dog pictured wearing a hat — continued racking up fresh highs in the past week, according to tracker CoinGecko. The total market value of the memecoin sector has reached more than $60 billion on Wednesday.

Memecoins have been a long-existing phenomenon in crypto, as small investors and promoters see the microscopic prices of memecoins as an opportunity to quick post huge returns despite the lack of traditional fundamentals.

“It’s not a great reflection of the actual realizable price,” said Thomas Perfumo, head of strategy at Kraken Digital Asset Exchange. “So for example, if you saw a memecoin that supposedly had a market capitalization of a billion dollars, it’s very unlikely that anyone would be able to sell anywhere close to a billion dollars of it without materially impacting the price.”

That’s not stopping fans of the tokens from trying to keep the momentum going. A group of dogwifhat token holders announced last week a public fundraising campaign to put the dogwifhat meme on the Las Vegas Sphere. The group has already reached its target goal of $6,50,000 in the USDC stablecoin, based on the transaction history of the digital wallet for the fundraise. But it’s unclear whether and when the fund will be used to promote the meme in Las Vegas.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Risk appetite in Bitcoin spurs enormous leveraged ETF flows

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Demand for the investment vehicles that offer leveraged exposure to Bitcoin is soaring as the digital asset hits record highs.

Leveraged futures-based exchange-traded funds such as VolatilityShares’ 2x Bitcoin Strategy ETF (BITX) are seeing flows rivaling spot Bitcoin ETFs. The fund raked in $630 million in net monthly inflows, beaten only by BlackRock and Fidelity, according to data compiled by K33 Research.

Futures-based Bitcoin ETFs currently hold an all-time high equivalent exposure of 83,300 tokens and leveraged Bitcoin ETFs represent nearly 25% of the open interest on CME, which is one of the largest marketplaces for crypto derivatives. Futures premiums on the platform have climbed toward 20% amid record-high open interest, K33 said.

“The massive uptick in flows to 2x leveraged BTC ETFs illustrates the huge demand for leveraged long exposure in BTC of late and is consistent with the increased risk appetite witnessed in BTC derivatives,” according to a note on Tuesday. “Enormous inflows” to the fund are the main catalyst for the surge in open interest on CME.

VolatilityShares’ 2x fund currently holds a Bitcoin equivalent exposure of 36,025 tokens after more than doubling the crypto currency under management 11 days into March, K33 data show.

The increasing interest in such funds has prompted a flurry of new offerings. ProShares is expected to launch five leveraged long and short BTC ETFs within the next month to cater to new market demand and Valkyrie recently launched its 2x leveraged product.

The rise of such funds comes as an influx of investors seek a variety of channels to make leveraged bets on the latest bull run in the crypto market. The US-based institutions tend to use regulated offerings such as crypto futures on CME and spot ETFs from traditional asset managers, while offshore entities turn to the options contracts on Deribit and perpetual futures without an expiration date on Binance, which are among the most popular products for crypto traders.

The funding rates for Bitcoin perpetual futures — a key indicator for leverage in crypto — remain elevated across major offshore exchanges, with Deribit, the leading crypto options trading platform, seeing record open interest and a surge in bullish bets on Bitcoin.

“Perps continue to highlight an immense risk appetite in the market, with funding rates staying exorbitant while open interest fluctuates vividly,” the note said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin tops $72,000 for the first time as rally builds steam

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin topped $72,000 for the first time, advancing for a sixth straight day and taking gains this year to almost 70% on the back of massive inflows into US exchange-traded funds.

The original cryptocurrency rose as much as 5% to $72,880 on Monday, before paring the increase. Smaller tokens like Ether, Solana and Avalanche also advanced. The crypto gains came even as equities were mixed ahead of a key report on US inflation.

“It’s a full on continuation of last week’s trend,” said Vetle Lunde, a senior analyst at K33 Research. “Traders are clearly in a risk-on mode.”

Investors have poured a net almost $10 billion into a batch of new Bitcoin ETFs since they launched in the US two months ago, igniting a broad surge in crypto markets. Digital assets scored more wins on Monday, as the London Stock Exchange confirmed it will accept applications for admitting Bitcoin and Ether exchange-traded notes and Thailand’s securities regulator said retail investors will be allowed to buy overseas crypto ETFs.

“With new highs being made and signs of continuing institutional support shown by the LSE news, some people might’ve seen that breakout as a perfect opportunity to get even longer BTC,” said Chris Newhouse, a DeFi analyst at Cumberland Labs.

The success of the crop of Bitcoin ETFs add to a range of bullish signals for cryptoassets. Perhaps the most anticipated milestone is the quadrennial “halving” scheduled for April, when Bitcoin’s supply growth will be reduced by half.

Other technical indicators point to growing interest among both institutional and retail investors. Open interest on Chicago-based CME Group’s Bitcoin futures market has jumped 44% from this year’s low, while a rebound in the so-called funding rate signals that traders are increasingly willing to pay a premium for opening leveraged long positions in Bitcoin.

“Perps (perpetual futures) have traded at premiums above $80 since BTC’s breakout at 07:00 (UTC), the premiums spiked towards $350 amidst BTC’s initial breakout alongside growing open interest,” said Lunde.

MicroStrategy Inc., the enterprise software firm that has made buying Bitcoin part of its corporate strategy, said on Monday that it spent $822 million purchasing more tokens from February 26 through March 10.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin tops $71,000 for the first time as rally builds steam

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bitcoin topped $71,000 for the first time, advancing for a sixth straight day and taking this year’s rally to almost 70% on the back of massive inflows into US exchange-traded funds.

The original cryptocurrency jumped as much as 3.2% to $71,631.45 on Monday. Smaller tokens like Ether, Solana and Avalanche also advanced.

“This rally comes following a weak Asian trading session in which shorts tested the conviction of longs — it appears the longs have given a rather convincing positive answer,” said Richard Galvin, founder of Australia-based crypto-focused investment firm DACM.

Investors have poured a net almost $10 billion into a batch of new Bitcoin ETFs since they launched in the US two months ago, igniting a broad surge in crypto markets. Digital assets scored another win on Monday, as the London Stock Exchange confirmed it will accept applications for admitting Bitcoin and Ether exchange-traded notes.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow