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Weekly Crypto Wrap

Friday, February 9, 2024

Welcome to MRP's Weekly Crypto Wrap, a look back at news reports, on-chain metrics, and other data that moved digital asset markets over the past week. These reports will be delivered every Friday morning, provided free of charge by MRP, and packed with useful information for those just beginning their research into Bitcoin and other cryptocurrencies, as well as investors with more experience in digital asset markets.

Click here to see everything we covered in the last iteration of the newsletter.

Aggregation of key events and breaking stories monitored by MRP

Exchanges: A decade in, Coinbase’s fortunes remain closely tied to bitcoin

Corporate Treasury: MicroStrategy’s Bitcoin Bet on Verge of Accounting Windfall for Investors

Stablecoins: Cryptodollar Minting Protocol M^0 Will Allow Institutions to Issue Stablecoins Backed by U.S. Treasuries

Fintech: Robinhood Adds MetaMask for Easier Ethereum Buys

Miners: Bulking Up For Bitcoin’s Halving, Miners Sold $1.6 Billion In Stock In 2023

Breaking down the most critical trends and transaction patterns on the blockchain

Digital asset markets surged back toward 2024 highs in the week to February 9, as the market cap of all cryptocurrencies bounced to nearly $1.8 trillion. That is up nearly 20% from a 2024 low of $1.5 trillion reached on January 23. Meanwhile, the unit price of the world’s largest cryptocurrency, Bitcoin (BTC), had risen to as much as $47,600 this morning. That was the highest level recorded in almost a month, reversing most of the decline witnessed after spot Bitcoin ETFs launched on January 11. Though the ETF launch was initially a “sell the news” event, as MRP noted would likely be the case, persistent net inflows into the nine newly-created funds, as well as an exhaustion in selling from the pre-existing Grayscale Bitcoin Trust (GBTC), have indicated that exchange traded products tied to cryptocurrencies are indeed in high demand and will likely play a key role in the long-term adoption of digital assets.

Owners of the hulking GBTC product, which was established in 2013 and carried $28.6 billion in AUM in the form of over 619,000 BTC prior to its conversion to a spot-ETF, were generating billions of Dollars in outflows on a daily basis in the opening days of trading due to its previous structure as a trust with a lock-up period, as well as a relatively high rate of fees. However, MRP pointed out in our January 26 Crypto Wrap that a softening pace of outflows from GBTC, which had already shrunk from a daily peak of -15,986 BTC to -10,871 BTC by that time, was likely a positive sign for Bitcoin prices since the unwinding of GBTC appeared to be more tempered than some initially feared. Daily outflows from GBTC have narrowed to as little -1,708 BTC this week while net inflows among all of the 10 spot Bitcoin ETFs has jumped out to +8,770 BTC. As of February 8, the total net flow of BTC into the ETFs since launch was +50,589 BTC, or nearly $2.4 billion at current prices.

Though those figures are equivalent to less than a third of a percent of Bitcoin’s market cap and circulating supply, these funds have gotten off to an unprecedentedly hot start when compared to similar products. Per data compiled by Bloomberg Intelligence analyst Eric Balchunas, Blackrock’s iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) have garnered more AUM in their first month of trading than any of the other 5,535 ETF launches over the past 30 years. These two funds carry 82,516 BTC and 69,433 BTC, respectively. If Bitcoin continues to regain its momentum, net inflows could accelerate at an even more aggressive pace.

Though Bitcoin’s ETF narrative garnered a massive amount of hype within just a six-month period between August of 2023 and the start of this year, the true market impact of these products will be dispersed more gradually and is likely to be significantly more impactful in the long-term. As we have highlighted in previous reports, the ETFs have opened up a new avenue of access for investment managers that previously may have been hesitant to allocate toward Bitcoin and cryptocurrencies. Moreover, that institutional demand could begin coming into the market just as the generation of new BTC is about to be halved in April. MRP will soon focus more closely on Bitcoin’s upcoming halving event, which occurs only once every 210,000 blocks (or roughly every four years), and analyze how that will impact miners and market prices of the asset in the months to come.


MRP's latest Daily Intelligence Briefings on everything from BTC to DeFi and NFTs

January 17, 2024: New BTC Funds See Strong Net Flows in First Few Trading Days, Interest May Shift to Potential ETH ETFs →

January 9, 2024: Bitcoin ETF Decision on Deck as Optimism Builds, Level of Inflows Could Steer Crypto’s Course Ahead →

December 4, 2023: Gold and Bitcoin Break Out, Greenback Stagnant on Rising Expectations for Earlier Rate Cuts →

October 24, 2023: BlackRock Reaches Breakthrough Milestones in Bid to Launch Spot-Backed Bitcoin ETF

October 16, 2023: Bitcoin Now Worth More Than Half of Crypto Market Cap, ETF Prospects Keep Majority of Supply Unspent

August 30, 2023: SEC Suffers Another Digital Asset Defeat in Court, Paving the Way for Reconsideration of Bitcoin ETF Applications →



A decade in, Coinbase’s fortunes remain closely tied to bitcoin

Bitcoin trading is less important to Coinbase than it once was. In 2020 and 2021, trading fees accounted for well over 80% of the firm’s quarterly revenues. Transaction fees account for closer to half of Coinbase’s revenue today, and bitcoin accounted for 38% of those transaction fees in Q3. 

Interest earned on its USDC reserves has become a growing chunk of Coinbase’s revenue. The 5.1% yield Coinbase offers on USDC is based on its Treasury backing. Blockchain rewards, including rewards earned for staking tokens to secure blockchains, accounted for 11% of Coinbase’s revenue in 2023. 

Read the full article from Blockworks +

Corporate Treasury

MicroStrategy’s Bitcoin Bet on Verge of Accounting Windfall for Investors

Under under a recently approved accounting rule change that requires valuing the digital asset at market prices, Microstrategy's Bitcoin holdings, which were listed at $1.8 billion entering the year, will need to be be updated to roughly $8 billion, more in line with the company’s current market capitalization. Before the revision, MicroStrategy had to take impairment charges to write down the value of its Bitcoin when prices fell but couldn’t recognize any increases. It has until 2025 to implement the change. The firm added 30,905 Bitcoin this quarter, worth more than $1 billion.

Read the full article from Bloomberg +


Cryptodollar Minting Protocol M^0 Will Allow Institutions to Issue Stablecoins Backed by U.S. Treasuries

M^0, a protocol that allows global institutions to mint fungible T-bills backed stablecoins, has unveiled its white paper. The team, which includes stablecoin pioneers from MakerDAO and Circle, emerged from stealth last year with a muscular $22.5 million seed round led by Pantera Capital. The M^0 protocol will go live in Q2 2024 and aims to recreate the $5 trillion-$20 trillion offshore dollar market for the digital age.

Read the full article from CoinDesk +


Robinhood Adds MetaMask for Easier Ethereum Buys

Ethereum software company Consensys, which created MetaMask, said that American customers will be able to buy digital coins and Ethereum-based tokens via Robinhood's low cost order engine. MetaMask is a popular Ethereum wallet and extension that can be used on browsers Google Chrome, Brave, Edge, and Firefox.

Read the full article from Decrypt +


Bulking Up For Bitcoin’s Halving, Miners Sold $1.6 Billion In Stock In 2023

The biggest publicly traded Bitcoin miners raised $1.63 billion in equity through the first 9 months of 2023 via public sales or private placements. For many miners, last year was a preparation period to gear up for a coming halving of Bitcoin's block reward, and what may be the toughest year yet in bitcoin mining. The equity sales attest to the shifting financial management strategies that public miners are executing to adapt to current market conditions ahead of the halving. From the end of 2022 to the end of Q3 2023, public Bitcoin miners reduced their burdens from $2.61 billion to $1.56 billion, a 40% decrease.

Read the full article from Forbes +


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