Dispatch #145: Got 99 Problems but an ETF Ain’t One

Jun 23, 2023 4 min read

Dispatch

In this patch of your weekly Dispatch:

Institutional FOMO 😱
Europe, US stocks down 🫳
Bullish CME 🎯

The Big Idea

The Institutions: Making Crypto Mainstream Again

We decided not to count the number of times we dedicated the Big Idea in Dispatch to institutional moves. If you’re a regular around here you’ll know they’ve garnered enough attention from us over the years and brought the industry into the mainstream with their decisions.

We did count, however, the number of applications submitted for a Bitcoin exchange-traded fund (ETF). After all, this was a very exciting week which saw a slew of spot BTC ETF filings by large asset management firms. At the same time Bitcoin returned to solid trading above $30,000, a level it last touched in April.

Here’s the deal: 43 applications for Bitcoin ETFs have been filed in North America between December 2020 and June 21, 2023. And while many of these were rejected, BlackRock, Bitwise, WisdomTree, Invesco, and Valkyrie do not give up that easily because they all filed applications again this week.

This instilled investor confidence from the expectation that these institutional players would bring more liquidity to the market, bolster sentiment, and foster even greater and wider adoption. Cryptocurrencies shot up across the board and observers started chattering about a so-called third wave of adoption, led by large firms.

Despite the uncertain regulatory environment, macroeconomic pressures, and the fact that a spot Bitcoin ETF approval is unlikely to come soon, numerous applications reveal a readiness to seize the opportunity in case it arises. They are unwilling to miss out, neither are we, and neither should you. 💪

The Latest In…

Markets

Last week we discussed how Vitalik’s roadmap won’t let Ethereum lose ground despite a drop in price and transaction volume. Apparently, all it took was a bit of market joy (and maybe Elon starting to follow Vitalik) for ETH to reach more than $1,900.
The US stock market deviated from its weeks-long winning streak, led by a decline in tech stocks.
Thursday morning saw a sharp drop in European markets, echoing the negative sentiment stemming from US Federal Reserve Chairman Jerome Powell's announcement of further rate hikes this year.
The market scenario portrays a trend where traditional finance is expected to leverage regulatory pressure on crypto to introduce new digital asset initiatives.

The Latest In…

Long Time No CBDCs

Singapore's Monetary Authority (MAS) joined hands with Korea, Italy, and the IMF to spice things up for CBDC research. The regulator released a fresh new whitepaper — the so-called innovative Purpose Bound Money (PBM) protocol — which proposes standards for digital money and looks into possible business and operating models for these. The focus of the paper is programmable money, i.e. money that is meant to be used for a specific purpose, regardless of whether the underlying currency is a CBDC, a tokenized bank deposit, or a stablecoin. Amazon is already on board, testing purpose-bound money for online retail payments.

The Latest In…

MakerDAO & T-bills

MakerDAO is on a billion-dollar shopping spree, beefing up its U.S. Treasury bond holdings to a whopping $1.2B after an initial $500M plunge in October. The gigantic move is part of MakerDAO's strategic quest to diversify its collateral pool and tap into the current yield environment. With eyes set on low-risk and liquid traditional assets, MakerDAO is said to be on the fast lane to revenue generation and the price of its native asset seems to agree (up 11% in the past seven days.)

The Week’s Most Interesting Data Story

Bullish CME

The Chicago Mercantile Exchange (CME) experienced extremely positive activity, with its basis hitting annual highs due to the most significant relative daily increase in open interest (OI) since November 9, 2022. This growth wasn't driven by allocations to futures ETFs, however. Perpetual OI also increased, reaching 324k BTC, the highest since January 14, 2023, albeit with a less pronounced growth of 7.36%. Funding rates are on the rise, reaching neutral levels on Binance, indicating a balanced sentiment between long and short positions, writes Vetle Lunde of K33 Research.