29th June 2023 > > ARK Invest.

tl;dr

ARK has updated its BTC ETF to copy Blackrock’s market monitoring terms, raising hopes for an early approval at the same time as supplies of both BTC and ETH diminish.

Market Snap

Market Wrap

This is the third day in a row of reporting an unchanged BTC price, further validating what we all know to be the truth – that BTC is the best store of value in the financial world, despite the best efforts of various regulators and dubious characters who wish to suggest otherwise.

Curious Cryptos’ Commentary – The first US spot BTC ETF

On the 17th June (https://www.curiouscryptos.com/post/17th-june-2023-blackrock-again) we looked at a critical section of Blackrock’s recent application to the SEC for approval of a spot BTC ETF. Of the more than 100 pages in the application (that’s the bureaucratic downside to over-regulation) the CCC commented:

“ … the killer section is on page 36 “Other Means to Prevent Fraudulent and Manipulative Acts and Practices”. The proposal includes a “surveillance-sharing agreement” for which the exchange (Nasdaq) will sign agreements with one or more centralised cryptocurrency exchanges for access to prices and volumes of spot trades.”

This is in response to the stance that the SEC has consistently taken towards all prior proposed BTC ETFs – that the price of BTC can be subject to market manipulation. We are many months away from the SEC’s decision about this specific ETF.

However, Cathie Wood’s ARK Investment Management has an application lodged with the SEC due for a decision by August 13th this year. This proposal has now been amended to include a section almost identical to that in the Blackrock ETF, greatly enhancing its prospects for approval.

We are just 6 weeks away from a potentially momentous decision that might lead to a huge inflow of investment dollars into BTC.

Curious Cryptos’ Commentary – Diamond hands

Talking of investment dollars, MicroStrategy (MSTR) has purchased an additional 12,333 BTC for $347mm during May and June. Its BTC stash is now worth $4.5bn with an average entry price of just under $30k. The market cap of MSTR stands at just $4.2bn giving a near 10% discount to the BTC on the balance sheet and assigning zero value to its day-to-day business.

MSTR purchases BTC through off-exchange brokers, probably from miners to a large degree, and from whales to a lesser degree. Those recent purchases average out at $28k per BTC. Though we don’t know the exact dates of each purchase, during May and June we have traded a range of $25k to $30k according to CoinMarketCap suggesting that the retail price of BTC on centralised cryptocurrency exchanges is very close to the wholesale price.

…

Crypto analytics firm Nansen reports that there is now more ETH locked up in staking contracts than available for sale on an exchange – 23.8mm vs 23.4mm. These each represent about 20% of total supply with an additional 30% locked away in smart contracts. ETH held at exchanges has reduced by 20% this year alone, whilst staked ETH has grown by a third. As confidence grows in the various staking options, and especially liquid staking, this trend is likely to continue.

With deflationary forces at work due to the burning of some of the fees for each new block, this increasing illiquidity of supply bodes well for holders in the future.

This data also suggests that 30% of ETH supply is sitting in cold storage doing no work. If you want to investigate staking options, the CCC has all the information you need to get started. Just ask.