Institutional Bitcoin Investment Surges Amid Speculation of U.S. Regulatory Changes

Data from sources such as Bloomberg reveals that Bitcoin exchange-traded funds (ETFs) and similar instruments are experiencing near-record weekly inflows.

Institutional interest in Bitcoin investment vehicles has surged amid growing anticipation of potential regulatory changes in the United States.

Data from sources such as Bloomberg reveals that Bitcoin exchange-traded funds (ETFs) and similar instruments are experiencing near-record weekly inflows.

The prospect of the United States permitting a Bitcoin spot price-based ETF has not only influenced the price of Bitcoin but has also positively impacted the broader cryptocurrency ecosystem.

Alongside cryptocurrency exchanges and mining companies, institutional investment options that have faced challenges in recent times are witnessing a resurgence in demand.

According to Eric Balchunas, a senior ETF analyst at Bloomberg, at least two well-known investment options experienced significant trading volume during the week ending October 27.

One of them was the ProShares Bitcoin Strategy ETF (BITO), the first futures-based ETF to receive regulatory approval in the U.S. in 2021.

BITO saw a trading volume of $1.7 billion during the week, marking its second-highest weekly volume since its launch.

Another noteworthy performer was the Grayscale Bitcoin Trust (GBTC), which saw a trading volume of $800 million.

This increased activity helped narrow the discount of GBTC shares to the Bitcoin spot price, reaching its lowest level in two years.

William Clemente, co-founder of crypto research firm Reflexivity, commented that ETF trading is now “back in full steam,” highlighting the renewed interest in these investment vehicles.

GBTC has experienced a remarkable resurgence in recent months, even before Bitcoin’s 15% price increase in the previous week. Legal victories in the journey towards converting GBTC into a spot ETF provided momentum for this revival.

Currently, Grayscale’s product trades with an implied share price that is just 13.1% below the BTC spot price, according to data from CoinGlass.

Despite the optimism surrounding GBTC, investment management firm ARK Invest has reduced its holdings of GBTC in line with its share price gains.

ARK Invest is also planning to launch a Bitcoin spot ETF, and GBTC currently accounts for 10.24% of its ARK Next Generation Internet ETF—a notable change since November 2022.

In conclusion, the potential for regulatory changes in the United States regarding Bitcoin investment vehicles has sparked a surge in institutional interest and trading activity.

This trend, along with the narrowing discount of GBTC shares to the Bitcoin spot price, suggests a growing confidence in cryptocurrency investment options among institutional investors.

Bitcoin Has Stiff Competition In Brazil: A Stablecoin Leads With 80% Of Transactions

While Brazil sees higher acceptance of USDT, other Latin American nations like Argentina have bigger appetites for Maker’s DAI.

This insight into crypto preferences comes as the market booms in anticipation of the potential approval of a spot Bitcoin ETF.

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What Happened?

Brazil’s revenue service agency states that 80% of all cryptocurrency transactions in the country represent those done in stablecoin Tether USDT/USD, as reported by CoinTelegraph based on government data.

Tax data in the country highlights that USDT and USDC are the most traded stablecoins in pairs with USD and BRZ.

As of mid-October, USDT transactions in Brazil stood at around $55 billion, almost double the volume of Bitcoin, which stood at $30 billion.

In the past 24-trading volume, Tether saw an expansion of 79% while BTC was up by 87%.

Data also reveals that 2022 witnessed a significant surge in the volume of USDT traded, as it crossed the sum of all the other cryptocurrencies traded in the same year.

What Is The Role Of Government?

Brazil's crypto exchanges have been required to disclose all user transactions to the government since 2019. The government tax agency tracks the crypto-related activities of citizens using a sophisticated system that relies on artificial intelligence and network analysis. It is also able to track suspicious activity and trace the location of individuals trading cryptocurrencies.

Brazil is also seeking to investigate crypto investments held by its citizens overseas, as the local Congress passed legislation last week recognizing cryptocurrencies as “financial assets” for tax purposes in foreign investments.

Earnings around $10,000 will have a 15% tax rate from January 2023 while anything above that amount will be taxed at 22.5%.

While local players like Mercado Bitcoin and Foxbit operate in Brazil, global crypto exchanges such as Coinbase, Binance, Bitso and Crypto.com also have their presence.

Brazil's Largest Bank Promotes Crypto

In May 2022, Brazil’s largest digital bank Nubank announced that users will now be able to purchase and sell Bitcoin and Ether on its platform. The bank’s parent company Nu Holding also allocated almost 1% of its cash on the balance sheet to Bitcoin to indicate confidence in the crypto.

Paxos' blockchain infrastructure will supply the crypto trading and custody service. Initially, Nubank enabled users to invest in crypto only through ETFs available through investment unit, NuInvest.

2,997 ETH Worth $5M Was Just Burned

What happened: On Sunday a total of 2,997.83 Ether worth $5,390,706, based on the current value of Ethereum at time of publication ($1,798.20), was burned from Ethereum transactions. Burning is when a coin or token is sent to an unusable wallet to remove it from circulation.

Why it matters: On August 5th, 2021, the Ethereum blockchain implemented an important upgrade known as EIP-1159. This Ethereum improvement proposal changed the fee model drastically. Now each transaction includes a variable base fee that adjusts according to the current demand for block space. This base fee is burned, or permanently removed from circulation, lowering the supply of Ether forever.

Ethereum is currently issuing new Ether at a rate of 4% per year, although this is expected to decrease to around 0.5-1% as a part of the Ethereum 2.0 upgrade. Once this occurs, many speculate that the burn rate of Ether will be greater than the token's issuance, causing ETH to become a deflationary currency.

The net annualized issuance rate for Ether yesterday was -1.00%.

Data provided by Glassnode

AVAX blockchain explorer to shut down as Etherscan fees draw controversy

Annual subscription fees for Etherscan's EaaS service has reportedly grown to $2 million per year.

Snowtrace.io, a popular blockchain explorer tool for Avalanche AVAX, will shut down its website, powered by Etherscan's Explorer-as-a-Service (EaaS) toolkit, on November 30. The Snowtrace team clarified that only its explorer powered by Etherscan will be shut down.

According to the October 30 announcement, Snowtrace users are required to save their backup information, such as private name tags and contact verification details, before the said date. While the team did not explicitly state the reason for shutting down the explorer, some have pointed to Etherscan's service fees for its EaaS toolkit. Mikko Ohtama, co-founder of tradingprotocol, claims that an annual subscription to EaaS can cost between $1-$2 million per year. Ohtama wrote: "EtherScan is a very good product, but smart contract verification is something that needs to be decentralised. Regulators and other are not going to be kosher with, how do you check this? The source code is hosted by a private company in Malaysia"

Phillip Liu Jr., head of strategy and operations at Ava Labs, also commented that the protocol is "moving onto something better" and is "absolutely not" cease operations. For a fee, Etherscan's EaaS service provides blockchains with a block explorer and application programming interface (API) solution. A block explorer may be discontinued due to non-renewal of an EaaS service agreement, insufficient bandwith, or limited traffic. In such instances, users are recommended to save their data, such as private name tags, transaction notes, contract verification details, etc., prior to shutting down.

Do Kwon's Terraform Labs Seeks Early Court Rejection of U.S. SEC Case

The stablecoin issuer filed for summary judgment, asking the judge to toss the regulator's accusations that Do Kwon and his company engaged in a multi-billion-dollar securities fraud.

The Terraform securities fraud case pursued by the U.S. Securities and Exchange Commission has reached the expected pre-trail stage at which the company made a motion asking the court to rule it should win without trial.

The company contends the SEC didn't make its case that unregistered securities were being offered.

Terraform Labs and its co-founder, Do Kwon, are asking a federal judge to side with them in the U.S. Securities and Exchange Commission (SEC) fraud case, arguing that the regulator hasn't managed to prove the crypto company was offering securities.

"After two years of investigation, the completion of a discovery period that resulted in the taking of more than 20 depositions, and the exchange of over two million pages of documents and data, the SEC is evidentiarily no closer to proving that the defendants did anything wrong," Terraform contended in its motion for summary judgment – a formal request to Judge Jed Rakoff of the U.S. District Court for the Southern District of New York that he decide the SEC hasn't sufficiently demonstrated its case to justify a trial.

The $40 billion disaster at stablecoin issuer Terraform in 2022 marked a big first domino in a series of prominent crypto firms going under, and the company is now one of several crypto businesses currently fighting with the agency over core questions underpinning the digital assets industry. After the company's TerraUSD stablecoin (UST) and its Luna cryptocurrency collapsed, it faced SEC accusations that the company and Kwon sold unregistered securities in a massive fraud that cost investors billions.

The firm is also asking the court to toss out the views of experts the SEC enlisted to make its case, including the "conceptually flawed" analysis of a Rutgers University professor.

An earlier attempt to get the case dismissed outright was rejected by the court, with Rakoff noting the SEC made a "plausible claim" that Terraform had offered investment contracts, meaning the case would correctly have been within the reach of the agency's securities enforcement jurisdiction.

A spokesman for the SEC declined to comment on the latest filings.

Kwon has asked the same court to reject the SEC's request to question him in the U.S. about the catastrophic crash of his company's tokens. Kwon's lawyers are opposing any opportunity for the stablecoin creator to offer testimony, arguing that it would be "impossible" to bring Kwon to the U.S. because he remains detained in Montenegro. Both South Korean and U.S. authorities have requested his extradition.