Dispatch #28: Fidelity Joins the Bitcoin ETF Hunt

In this patch of your weekly Dispatch:

• Fidelity’s Bitcoin ETF proposal
• Uniswap’s v3 launch
• Powell and Yellen speak about Bitcoin and CBDCs

The Big Idea

5 Bitcoin ETF Proposals? Why Not 6?!

It’s honestly a bit of a joke at this point. Just a few weeks ago, Dave Portnoy announced an ETF that would trade entirely based on Reddit and Twitter sentiment, yet somehow a Bitcoin ETF is beyond the pale?

Many in crypto think that the previous SEC leadership was hostile to a Bitcoin ETF but that the incoming SEC Chair Gary Gensler (who previously taught a course on Bitcoin and blockchain at MIT) is more amenable. What’s more, some wonder if newly active Bitcoin ETFs in Canada add more pressure. Certainly, based on the number of applications out there, some big institutional players think the time is right.

This week, Fidelity became the sixth applicant for a Bitcoin ETF. They are by far the biggest name in traditional finance to propose an ETF, which makes sense given that their Fidelity Digital Assets division was one of the first movers to the space as a whole.

They join a slew of other applicants, including: Valkyrie, NYDIG, Gemini, Anthony Scaramucci’s SkyBridge, and VanEck. The SEC opened the formal review period on VanEck’s proposal last week, meaning they have 45 days (which they can extend to 240 days) to give an answer.

If for no other reason than sheer exhaustion from reading applications, we hope the SEC finally does the right thing and lets the long anticipated Bitcoin ETF become a reality.

The Latest In…

Central Bank Digital Currencies

There was a heckuva lot of discussion around CBDCs this week – specifically the digital dollar. Treasury Secretary Janet Yellen and Fed Chair Jerome Powell both testified about economic growth this week and fielded a number of questions about crypto assets and digital currencies. What did we learn? Powell sees Bitcoin as a substitute for gold, not a dollar competitor. When it comes to a digital dollar, both Yellen and Powell are skeptical of anonymous currencies, but do think we need – at a minimum – more privacy than China. On top of all that, we learned that the Boston Fed and MIT are planning on sharing two prototype digital dollar designs they’ve been working on by the beginning of the summer.

The Latest In…

DeFi

Easily the biggest news of the week in DeFi is the launch of Uniswap v3. There has been tons of discussion about the new features, like how they’re evolving automated market-making. One of the most contentious debates, however, has been around their implementation of a new type of business license that doesn’t allow for forks/copies for the first two years. While this protects the work they’ve done, does it also undermine the notion of decentralization? It’s a great debate to have, and either way, we’re excited about what the Uniswap team has built.

The Latest In…

Bitcoin

We mentioned Powell’s calling Bitcoin a substitute to gold. And as you’ll see in our Data Story, we’ve got some juicy thoughts on why BTC’s price has been hurting this week. Certainly the most fun event of the last few days, however, was Elon Musk announcing that people can now pay for Teslas with Bitcoin. What’s more, Tesla is running nodes and won’t be converting it back to fiat. #Hodl, hodl, hodl. Now THAT’s the type of corporate participation in this space that we like to see although there’s something we can’t stress enough – why sell your BTC to buy a depreciating asset when you can get a loan, get the car, and keep the crypto? Wink wink nudge nudge 👉 Instant Crypto Credit Lines™, doh.

The Latest In…

Mainstreaming

The NBA has come to crypto in a big way over the last year. Certainly, most notable is the launch of Dapper Labs NBA Top Shot, which is by far the biggest NFT project of all time, nearing half a billion in sales. Turns out, Dapper isn’t the only crypto company that balls. News broke this week that FTX had secured the naming rights for the Miami Heat’s arena. To be honest, of any stadium to be named after a crypto company, the one in the city with a mayor fiercely trying to attract the world of tech and crypto just makes sense.

The Week’s Most Interesting Data Story

Don’t Love This Price Action? Don’t Stress

On the one hand, it’s useful to zoom out and point out that Bitcoin has been above $50,000 for weeks. On the other, there’s no denying that this week’s sideways-lurching-down has been stressful. Are institutions getting bored? Has retail lost its steam? In fact, it seems like the reality may have more to do with the $6B in options expiring Friday. We’ve seen a similar downward consolidation at the end of each of the last three months. This great thread helps explain why. Is this just a dynamic we need to understand and expect now?

Hot Topics

What the Community Is Discussing

When the Turkish Lira took a beating at the beginning of the week, searches for ‘Bitcoin’ skyrocketed.

Some additional comparative historical analysis of market pullbacks during bull runs.

Tell us again how Bitcoin is only used for speculation?

Our Take

@AntoniNexo This Week

• It’s AMA time! Tune in for the March edition of our Ask-Antoni-Anything, starting at 16:00 UTC, and don’t be shy to fire those questions you’ve kept wondering about.
• While we await the official verdict on the first Bitcoin ETF in the U.S., Antoni gave his on “sentiment ETFs” which track online investor attitudes to capture the moves of the stock market. Here’s what he told Business Insider: "Paradoxically, the pandemic actually led to an influx of new investors, many of whom are likely partaking in the ongoing ETF push. The rise of the so-called sentiment ETFs, for example, makes a lot of sense in a socially distanced world. Instead of talking over beer in the pub, people are taking to Twitter and Reddit to share their attitudes towards stocks."
• As Nexo clients, you’re probably familiar with our tokenomics overhaul Nexonomics. Want to know why we’re so big on tokenomics? Antoni elaborates in this CoinMarketCap piece. Beside all the business milestones we achieved thanks to this program, we also learned a lot about token design and macrotokenomics.

What to Watch for Next Week:

• Will Bitcoin recover from the options expiry pressure?
• Will someone else join the Bitcoin ETF race?
• Will people still be talking about BitClout?