Key Takeaways:
Bitcoin reached a new all-time high above $69,000 last week and surged beyond $72,000 on Monday morning.- MicroStrategy’s purchase of more bitcoin contributed to the rise, boosting its stock, while Blackrock’s spot bitcoin ETF, IBIT, saw significant inflows.
- The SEC’s settlement with former crypto exchange ShapeShift led to questions from two commissioners about the lack of regulatory clarity in the U.S. crypto industry.
- Federal Reserve Chairman Jerome Powell stated during a congressional hearing that the central bank is not close to implementing a central bank digital currency.
- Ethereum is expected to gain attention this week due to its scheduled Denunc upgrade.
What Happened in Crypto Markets Last Week?
Bitcoin (BTC) surged beyond another significant price threshold, reaching $72,000 this morning, building on the momentum from the previous week when it achieved two consecutive all-time highs. Concurrently, ether experienced a steady climb, surpassing $4,000, driven by optimism surrounding the upcoming Dencun upgrade for the Ethereum network. This upgrade is anticipated to enhance transaction processing speeds, particularly at scale, thereby reducing fees and improving overall network efficiency.
In other developments, two Securities and Exchange Commission (SEC) commissioners expressed dissatisfaction with the current regulatory framework governing the cryptocurrency industry in the United States. Additionally, Federal Reserve Chairman Jerome Powell reiterated that there are no immediate plans to introduce a central bank digital currency (CBDC) tied to the U.S. dollar. These statements underscore ongoing discussions surrounding regulatory clarity and the potential adoption of digital currencies by central banks.
Bitcoin Hits a New All-Time High on Back of ETFs
The recent surge in bitcoin’s price, which has led to multiple all-time highs, has been attributed to various factors including the introduction of spot bitcoin exchange-traded funds (ETFs) in the United States and the anticipation surrounding the upcoming halving event. However, following each peak, the cryptocurrency experienced significant declines before partially recovering.
On Monday, bitcoin surpassed the $72,000 mark, driven possibly by positive sentiment stemming from the UK regulator’s shift towards permitting cryptocurrency exchange-traded notes (ETNs) in the country.
According to a statement from the London Stock Exchange, the Financial Conduct Authority (FCA) expressed willingness to entertain requests from Recognised Investment Exchanges (RIEs) to establish a UK-listed market segment for cryptoasset-backed Exchange Traded Notes (cETNs). These products would cater specifically to professional investors, including authorized or regulated investment firms and credit institutions operating within financial markets.
Blackrock’s Bitcoin ETF, MircoStrategy are Big Bitcoin Buyers
In recent months, Blackrock’s iShares Bitcoin Trust (IBIT) has emerged as a significant center for bitcoin trading activity, witnessing a surge in its bitcoin holdings that temporarily surpassed those of MicroStrategy (MSTR) last week. However, MicroStrategy made a notable announcement on Monday, revealing the acquisition of an additional 12,000 bitcoins, bringing their total holdings to 205,000.
Meanwhile, the collective size of the nine new exchange-traded funds (ETFs) has now surpassed that of Grayscale Bitcoin Trust (GBTC), as reported by BitMEX Research. GBTC, which transitioned into an ETF, has encountered significant outflows amounting to over $10 billion. Notably, Grayscale’s offering imposes higher fees of 1.5% compared to the lower fees of the nine spot bitcoin ETFs currently available in the market.
Bitcoin Price Powering Gains For Some Crypto-Related Stocks
MicroStrategy’s strategic move to invest in bitcoin is reaping significant rewards, with the company’s stock experiencing a remarkable surge. In early afternoon trading on Monday, MicroStrategy shares surged by 16%, reaching approximately $1,650. Over the past year, the stock has soared by over 600%, with a notable 140% increase since the beginning of 2024.
According to Michael Saylor, the executive chairman of MicroStrategy, the company’s shares offer an attractive option for investors seeking exposure to bitcoin. Saylor highlighted MicroStrategy’s unique position, stating, “If you’re bitcoin-curious right now and you want to buy bitcoin at the all-time high, how do you get the upside in bitcoin with downside protection?” He emphasized MicroStrategy’s substantial bitcoin holdings, funded in part by a $800 million debt issuance, which now stands at $12-$13 billion on the balance sheet.
Saylor outlined the advantages of investing in MicroStrategy over traditional bitcoin ETFs, noting the potential for yield against shares in a tax-efficient manner. For those who are staunch supporters of bitcoin, Saylor suggested that MicroStrategy offers an attractive alternative with its strategic bitcoin holdings.
Meanwhile, Coinbase (COIN) has also witnessed significant gains amid the bitcoin rally. Despite experiencing technical glitches due to surging trading volumes in recent weeks, the cryptocurrency exchange stock has surged by more than 15% in the past five days and has achieved a remarkable 70% increase year-to-date.
SEC Commissioners Criticize Agency’s Crypto Stance
The Securities and Exchange Commission’s (SEC) recent enforcement action against former digital assets trading platform ShapeShift has sparked criticism from within the regulatory body itself. The SEC levied a $275,000 fine against ShapeShift for allegedly facilitating trades involving digital assets deemed securities, although the specific tokens in question were not identified.
SEC Commissioners Hester Peirce and Mark Uyeda voiced concerns about the lack of clarity regarding which tokens are classified as securities. They argued that this ambiguity creates challenges for crypto firms striving to ensure regulatory compliance, potentially hindering innovation within the industry.
In a joint statement, Peirce and Uyeda emphasized that cases like this one fail to protect investors and instead serve to intimidate innovators and entrepreneurs. They expressed dissent regarding the SEC’s approach to enforcement in this instance.
Their sentiments echo frustrations expressed by other companies in the crypto space, such as Coinbase and Kraken, which have also faced lawsuits from the SEC for allegedly operating unregistered securities exchanges. These criticisms underscore broader concerns within the crypto industry regarding regulatory clarity and its impact on innovation and entrepreneurship.
Fed Chair Powell Says No Reason to Worry About CBDC
During recent Congressional testimony, Federal Reserve Chairman Jerome Powell sought to address concerns regarding the potential introduction of a U.S. central bank digital currency (CBDC).
Powell emphasized that the Federal Reserve is currently far from recommending or adopting any form of CBDC. His statement aimed to dispel speculation that the introduction of a CBDC could lead to the Fed competing directly with private banks or monitoring personal financial transactions. Instead, Powell stressed that any initiatives related to digital currency would operate within the existing banking system.
His remarks come at a time when there are legislative efforts underway to prevent the Federal Reserve from issuing a CBDC without explicit approval from Congress. These discussions reflect broader debates surrounding issues of privacy and the potential impact of central bank-backed digital currencies on the overall financial landscape.
What to Expect from Ether Network Upgrade
Ether (ETH) has surged to $4,000, marking its highest level since December 2021. The milestone comes ahead of the anticipated network upgrade known as Deneb-Cancun or Dencun, scheduled for this week. Ether saw a more than 4% increase on Monday alone and has recorded over a 70% gain year-to-date.
The upcoming upgrade, according to Fidelity Digital Assets, is expected to bring significant fee reductions across various layer-two network protocols that operate atop the Ethereum blockchain.