Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
Yesterday was yet another new Bitcoin all-time high. On Tuesday, a sharp wick down to test the previous all-time high of $69,000 was quickly eaten up by hungry institutions. The Bitcoin ETFs saw a new daily net inflow record – over $1 billion. This crushed the previous record by $370 million.
As we have discussed in previous articles, BlackRock’s IBIT has been the standout ETF seeing over $11 billion in inflows. The majority of Tuesday’s $1.045 billion net inflows came from the mighty IBIT with nearly $850 million. One of the reasons why Tuesday’s flows were so strong was due to Grayscale’s ETF (GBTC) only having outflows of $80 million. This is far below their approximate daily average of $260 million outflows. IBIT has been absorbing the majority of the GBTC’s $11 billion outflows as investors seek to escape their 1.5% fees. However, on Tuesday, Grayscale filed for a new product – the “Grayscale Mini Bitcoin Trust.” This new product will have lower fees with all current GBTC holders getting shares in it with some of GBTC’s bitcoin being redistributed to it. The new product diversifies Grayscale’s ETF strategy from a strictly low-volume high-fee model to a low-fee high-volume. This is likely to prevent their Bitcoin fleeing to low-fee competitors, such as VanEck’s HODL. VanEck has set 0% fees on their ETF until March 2025 in an attempt to increase their inflows.
On Monday, the UK’s Financial Conduct Authority stated they would not object to the introduction of crypto-backed exchange-traded notes (ETNs). The London Stock Exchange said they would accept applications for Bitcoin and Ethereum ETNs in Q2 2024. ETNs differ from ETFs with issuers not having to hold the underlying asset. They only promise to pay the holder the same return as the asset’s benchmark when the note is sold. However, the FCA and the exchange stated any crypto ETN listing would require physical backing and no leverage. This is a step in the right direction for the UK and potentially unlocks billions of pounds from crypto-hungry UK funds. Sadly the ETNs will be limited to only professional investors as the FCA still deems crypto as “ill-suited for retail consumers.”
Coinbase’s latest $1 billion convertible note offering has people wondering if they are trying to copy MicroStrategy. It appears Coinbase will use the funds for much more conservative reasons such as repaying debt or buying companies… but maybe that’s not a bad idea in a bull market.