Spot Bitcoin ETFs Have Almost $100M in AUM in Brazil, Led by Hashdex Offering
As investors continue to await approval of a spot bitcoin exchange-traded fund (ETF) in the U.S., a check of Brazil finds hefty demand for such vehicles which have been trading in that country for more than two years. Together, those ETFs have $96.8 million of assets under management (AUM) as of November 21, led by Hashdex's Nasdaq Bitcoin Reference Price FDI (BITH11) with $57.8 million in AUM as of November 21, or a market share of about 60%.
As comparison, the largest ETF in the nation, iShares Ibovespa Index (BOVA11), has $2.41 billion in AUM and the second largest, the iShares BM&FBOVESPA Small Cap (SMAL11), has $1.19 billion in AUM. For reference, the largest U.S. ETF, the SPDR S&P 500, has roughly $430 billion in AUM. According to Marcelo Sampaio, CEO and founder of Hashdex, the success of bitcoin ETFs in Brazil. “There is a growing positive sentiment across the most sophisticated investors and we’ve been seeing increasing interest from some of the largest institutions whether that be either allocating or considering adding crypto soon to their portfolios,” said Sampaio in an interview with CoinDesk. Hashdex’s spot bitcoin ETF started trading on August 1, 2021.
Ark Invest GBTC Share Sold To Maintain Strategic Investment Position
This Ark Invest GBTC share sale has strategically reduced the holdings of the Next Generation Internet ETF (ARKW) to 579,077 GBTC shares for the month of November. The decision to sell GBTC shares is not a novel one for ARK Invest, having done so three times previously, amassing a total of $11 million based on corresponding closing prices. However, the motive behind these sales is to uphold the desired weight of ARK Invest’s investment position.
Notably, Grayscale, along with other asset managers like BlackRock, is awaiting regulatory approval. Ark Invest’s strategic selling aligns with its typical market approach, buying crypto stocks during downturns and capitalizing on positive trends for profit. This move coincides with a broader surge in the share prices of Coinbase and GBTC amid the current euphoria in the cryptocurrency market. ARK Invest’s actions reflect a calculated strategy to manage its portfolio in the dynamic crypto landscape, ensuring optimal positioning for potential market shifts. ARK Invest needed to offload a significant number of shares to maintain its fund’s allocation cap, hovering around 9%.
Bitcoin IRA Savers Have New IRS Contribution Limits in 2024
The IRS raised the contribution limit for individual retirement accounts for 2024. Cryptocurrency investors can now save $500 more in a self-directed Bitcoin IRA. On Nov 1, the IRS announced, “The limit on annual contributions to an IRA increased to $7,000, up from $6,500,” for the 2024 tax year. The 401(k) limit also went up by $500 to $23,000. That means Bitcoin investors who are saving for retirement with a self-directed Bitcoin IRA can now contribute $500 more next year.
Saver investors looking to hedge inflation, diversify their portfolio, or add a risk-reward, high-growth tech play to their strategy also get a tax benefit with a Bitcoin IRA or 401(k) account. The main advantage of an IRA is taxpayers can deduct their contribution from the amount of their taxable income. Some 401(k) savers may also have the option to contribute Bitcoin to their 401(k) and get a tax benefit. That is if their employer allows it and works with a pension fund that provides digital asset services. Otherwise, they have to use a self-directed Bitcoin IRA to get a tax deduction. Fidelity Investments, for example, works with 23,000 employers to maintain Bitcoin 401(k) retirement accounts. Its Digital Assets arm provides digital custody services, allowing 401(k) contributors to save for retirement using Bitcoin.
Grayscale Bitcoin Trust Could See $2.7B of Outflows if ETF Conversion Is Approved: JPMorgan
Grayscale Bitcoin Trust (GBTC) shares have been bought in the secondary market this year at a deep discount to net asset value (NAV) in anticipation the trust’s conversion to an exchange-traded fund (ETF) will be approved by the U.S. Securities and Exchange Commission (SEC), JPMorgan (JPM) said in a research report Thursday. The bank estimates a net $2.5 billion has flowed into GBTC since the start of the year, increasing to $2.7 billion if adding the covering of short interest.
“Assuming this buying flow was mostly speculative in anticipation of GBTC being converted to an ETF, then it is likely that this $2.7b would come out of GBTC as these investors take profit once GBTC gets converted,” analysts led by Nikolaos Panigirtzoglou wrote. “If this $2.7b exits completely the bitcoin space then such an outflow would of course put severe downward pressure on bitcoin prices,” the authors wrote. “If instead most of this $2.7b shift into other bitcoin instruments such as the newly created spot bitcoin ETFs post SEC approval, which is our best guess, then any negative market impact would be more modest.” Still, the “balance of risks for bitcoin prices is skewed to the downside in our opinion as some of this $2.7b is likely to completely exit the bitcoin space,” the bank said.
Bitcoin's Anti-Censorship Ethos Surfaces After Mining Pool F2Pool Acknowledges 'Filter'
F2Pool, the third-biggest Bitcoin mining pool, drew ire on social media after a report that it might be censoring transactions from an address subject to U.S. government sanctions. F2Pool project's leaders subsequently appeared to confirm the report, stirring up controversy since "censorship resistance" is considered by many Bitcoiners to be a cardinal principle of the largest and original blockchain. At the same time, many government officials around the world have expressed concern that blockchain networks.
The Bitcoin development-focused blogger 0xB10C wrote Nov. 20 that his "miningpool-observer" project "detected six missing transactions spending from OFAC-sanctioned addresses." OFAC stands for the Office of Foreign Assets Control, a lead agency in U.S. government efforts to enforce economic sanctions. A few of the instances "are likely false-positives and not the result of filtering," the blogger wrote. A Bitcoin mining pool is where operators working to confirm transactions on the network join together to coordinate their efforts and then share any resulting rewards – typically with the goal of providing a steadier income stream.
Pantera CEO Foresees Spot Bitcoin ETF Breaking 'Buy the Rumor, Sell the News' Cycle
Dan Moorehead, founder and CEO of Pantera Capital, anchors his letter on spot bitcoin ETFs in the classic Wall Street maxim, “Buy the rumor, sell the news.” This saying implies that by the time significant events come to fruition, their effects are already priced into the market, limiting further gains. Yet, Moorehead contends that the introduction of a spot bitcoin ETF could disrupt this pattern, presenting a novel investment avenue in the blockchain realm.
In the crypto sector, major regulatory developments have typically mirrored this expected trajectory. Moorehead observes that events like the CME futures launch and Coinbase’s initial public offering (IPO) were characterized by initial surges and subsequent sharp declines. Nonetheless, he anticipates that the potential approval of spot bitcoin ETFs will break away from this norm, marking a new chapter in the market behavior of BTC. Highlighting the game-changing nature of spot bitcoin ETFs, Moorehead likens their effect to the past inclusion of commodities and emerging markets into mainstream investment portfolios. He underscores the necessity of a spot bitcoin ETF for digital assets to gain recognition as a genuine asset class.
Fed Minutes Release May Be a Non-Event for Bitcoin
The minutes of the Federal Reserve's November meeting, a closely watched record offering clues about the direction of monetary policy and its potential impact on the economy and markets, will be made public at 19:00 UTC (14:00 ET). At the Nov. 1 meeting, the Fed kept the benchmark interest rate steady in the range of 5.25% to 5.5%, having last lifted it in July. During the post-meeting press conference, Chairman Jerome Powell said.
While the minutes due later today are likely to take a similar line, they may not elicit a reaction from financial markets. That's because weak U.S. economic data released since the meeting have bolstered expectations the central bank is done raising rates. In other words, the November meeting minutes may simply be outdated. Release of the minutes "is likely to be less market-moving than usual, given the post-meeting softness in data," analysts at ING said in a Nov. 17 note to clients. "We have already heard from several Fed officials who have welcomed the direction of the numbers but commented that they want to see more of the same to be sure that inflation is on the path to 2%."
ARK resubmits Bitcoin ETF another update to its S-1, marking the third amendment in its ongoing efforts to refine and strengthen its Bitcoin Spot ETF prospectus. This development comes as a semi-shocker, but in a positive light, reflecting the commitment to meticulous preparation for eventual submission to the Securities and Exchange Commission (SEC). S-1 document showcase ARK resubmits Bitcoin ETF’s dedication to ensuring precision and completeness in its proposal.
Each amendment represents a step forward in aligning the prospectus with the regulatory expectations set by the SEC. The crypto community views this iterative refinement positively, interpreting it as a proactive measure to enhance transparency and address any potential concerns that may arise during the SEC approval process. The significance of ARK’s persistence in amending the S-1 lies in its potential impact on the broader cryptocurrency market. A Bitcoin Spot ETF approval by the SEC holds the promise of opening new avenues for institutional and retail investors to participate in the cryptocurrency space. It could also contribute to increased market liquidity and potentially influence broader regulatory sentiment toward digital assets.
BitGo CEO expects further complications before a Bitcoin ETF can hit market
In a recent interview with Bloomberg TV, BitGo CEO Mike Belshe expressed a cautious outlook on the approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. SEC. Belshe’s optimism regarding the potential approval of a spot Bitcoin ETF was accompanied by a dose of realism, indicating that the path to approval might encounter additional hurdles.
The key concern highlighted by Belshe revolves around market structure issues, specifically the SEC’s insistence on the separation of exchange and custody roles. This issue has been contentious in various applications, particularly those involving Coinbase custody. Belshe noted that the SEC’s emphasis on market structure is not unprecedented, citing the existing separation of exchanges from custody in other markets like the CFTC market structure and equities markets. He also suggested aligning with this separation model would benefit the crypto market. SEC will demand a complete separation of these functions before approving the applications.
More Bitcoin ETF Rejections 'Quite Likely,' BitGo's Belshe Says
BitGo CEO Mike Belshe said it's "quite likely" the U.S. Securities and Exchange Commission (SEC) will reject a series of spot bitcoin (BTC) exchange-traded fund (ETF) applications despite industry-wide optimism. Speaking in a Bloomberg interview, Belshe said the SEC might reject current applications on the basis that exchanges and custody are not separated. Coinbase (COIN) has been selected by several applicants as a custody partner for a potential ETF.
Belshe says the SEC could reject ETF applications until exchanges and custody separate out. "There are a lot of risks in that entity Coinbase that are not understood," Belshe said. "I think that the SEC could quite likely come back and say: 'Nope, you've got to separate out those things fully before we move forward.'" Several ETF analysts have said that the chances of an ETF being approved in January are around 90%. The SEC has rejected numerous applications over the years, citing concerns over potential market manipulation and a lack of customer protection. Fund manager BlackRock filed an application for a spot bitcoin ETF in June. Since then, the price of BTC has rallied by 45% to $36,200, according to TradingView data.