What happened this week in the world of blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a concise and compact weekly review.
Selected articles of the week:
For the past six months, almost a dozen providers have been waiting for the green light from the US Securities and Exchange Commission (SEC) to launch the first spot-based Bitcoin ETF. For years, the authority refused to approve such products – always with obviously untruthful justifications. Finally, the clear court ruling in the Grayscale v. SEC case in August 2023 forced the regulator to revise its ETF interpretation. Nevertheless, the authority used every trick in the book to delay the decision to the last minute. The SEC postponed approval three times until the very last deadline was reached this Wednesday. Due to the court ruling, the authority had no choice but to wave through the spot Bitcoin ETFs. The contentious and political nature of this dispute was underscored by the statements of the five SEC commissioners in the aftermath of the approval. Under the leadership of Chairman Gary Gensler, the Democratic commissioners were once again highly critical of the crypto sector. They argued that Bitcoin was a purely speculative investment vehicle anyway and had no intrinsic value. Republican commissioners Mark Uyeda and Hester Peirce countered that the authority had alienated the sector with the utmost chicanery. Ultimately, the SEC approved the spot bitcoin ETFs by a vote of three to two, with Gensler casting the deciding “yes” vote for the majority.
The SEC has approved all pending Bitcoin ETF applications, paving the way for exposure to an exceptionally broad investor base.
The opposing opinions of the SEC commissioners were not the last controversy of the ETF procedure. Already on the first day of trading, some brokerages such as Vanguard, Citi, UBS and others blocked trading in the newly approved Bitcoin products. They argued that the asset class was too volatile for clients – only selected investors should be given access to Bitcoin ETFs. And despite these at times unprofessional complications, the new products wrote history. Over USD 4.6 billion worth of shares changed hands on the first day – almost half of this was accounted for by the Grayscale Bitcoin Trust (GBTC), which was newly converted into an ETF. By comparison, the previous record volume for day one was held by the launches of the BlackRock U.S. Carbon Transition Readiness ETF, shortly followed by the first futures Bitcoin ETF (BITO) with just over USD 1 billion. This volume was surpassed by the spot Bitcoin ETFs in the first hour of trading. An impressive result despite the high expectations placed on the products.
The eleven newly approved spot market-based Bitcoin ETFs beat all previous records with a total trading volume of over USD 4.6 billion.
Aside from long-awaited investment vehicles, a lot is happening on the blockchains themselves. So-called “ordinals” – inscriptions of data directly into the Bitcoin blockchain – have conquered the largest decentralized network over the past year. Similar to the non-fungible tokens (NFTs) of popular smart contract platforms, ordinals are unique digital assets. However, traditional NFTs usually store data outside of the blockchain with URL references that lead to an image or video file. Ordinals use inscriptions to store content directly in the blockchain. This design increases decentralization and resistance to censorship, but requires far more storage capacity. The result is a record high fee level for Bitcoin transactions.
Ordinals, originating on the Bitcoin blockchain, can be considered a type of non-fungible token (NFT) that store different types of metadata.
In addition: Exactly one week before the long-awaited approval of the spot Bitcoin ETFs, there was a wave of liquidation on the crypto markets. Almost USD 800 million in derivative positions were forcibly sold due to so-called flash crashes. Bitcoin was one of the only cryptocurrencies to close the week in the green. A detailed analysis by market data provider Kaiko.
A summarizing review of what has been happening at the crypto markets of the past week. A weekly report in cooperation with Kaiko.
