market volatility

Kraken Report: Bitcoin Trading Hit a 6-Month Low of 51% Amid Snail Speed in June

Leading US cryptocurrency exchange Kraken has presented a report through its research arm Kraken intelligence showing Bitcoin trading has nosedived by 51% depicting a six-month low since the start of the year.

Snail’s pace recorded in June

Bitcoin’s trading volatility was sluggish in June because it represented a 31% month over month (MoM) decline. As per the report, “A lackluster market drove Bitcoin’s annualized volatility to a 6-month low of 51% amid a -31% MoM drop in trading volumes this June, making it the quietest month since February for the world’s largest crypto asset by market capitalization.”

This trend flipped the correlation between Bitcoin and other financial instruments. For instance, its correlation with gold was weakened from 0,50 to -0.49. On the other hand, Bitcoin’s connection with the S&P 500 index was strengthened from 0.13 to 0.52.

This change of events was recorded amid propelled confidence of economic conditions bottoming and the worldwide stock market recovering.

Tightened S&P 500 Correlation

The report notes that Bitcoin’s price action was uneventful in June as the leading cryptocurrency’s relationship with the S&P 500 index was boosted. Therefore, market participants have been asked to be cautious and give CBOE’s Volatility Index (VIX) a keen eye as this will offer a better comparison between Bitcoin’s market dynamics and the traditional financial markets.

Kraken Intelligence also stipulated, “With Bitcoin hovering beneath the resistance of a multi-year pennant formation for more than 2 months and holding above its 50-week moving average, some believe bitcoin is on the brink of embarking on a new bull-market cycle in the month(s) ahead.”

The report suggested that a Bitcoin bull run could be triggered if it could break the $10,500 resistance level as this could prompt an uptrend by setting a higher high.

In a recent radio interview, ‘Rich Dad, Poor Dad’ renowned author Robert Kiyosaki stated that there was light at the end of the tunnel for Bitcoin as he has had a hawkeye for Bitcoin-stock fluctuations for quite some time.

ARK Invest Buys Record Amount of Coinbase Stock, Despite Market Volatility

ARK Invest, led by tech-focused investor Cathie Wood, has made a record purchase of Coinbase stock amidst a volatile market. Despite Coinbase tumbling by 8% on March 10, ARK Invest bought the largest amount of the stock since the start of the year, comprising around 30% of all Coinbase purchases in 2023. This exceeds their total Coinbase stock buys of around $13 million in January and $42 million in February.

In addition to Coinbase, ARK Invest has also been actively purchasing Robinhood stock. On March 9, the company bought 265,566 Robinhood shares for its ARKK fund, following similar purchases of 268,086 and 219,883 shares on March 8 and 6, respectively.

Despite the recent market turbulence, ARK Invest remains optimistic about the cryptocurrency industry and Bitcoin in particular. Cathie Wood is one of the biggest crypto bulls in the world, predicting that Bitcoin will reach $1 million in the not-too-distant future. She sees the cryptocurrency as a promising risk-on asset, along with other technological innovations like self-driving cars and genomics.

However, ARK Invest has not been immune to the market downturn. Reports suggest that the firm has earned more than 70% of its $310 million fees since the price of its ARKK fund plummeted by 76% from its all-time high in February 2021. Despite this setback, ARK Invest has earned an average of roughly $230,000 in fees daily in 2023, as the fund’s value has slightly recovered from around $30 in early January to $37.3 in mid-March.

The latest bullish investments by ARK Invest come amid renewed market volatility, with Bitcoin dipping below $20,000 for the first time since early January. The market has been rocked by the news that Silvergate crypto bank is planning to wind down operations and liquidate the bank.

Despite the challenges facing the cryptocurrency industry, ARK Invest remains committed to its bullish outlook. The firm sees continued growth and innovation in the sector, with Bitcoin and other cryptocurrencies playing a key role in the future of finance. With the backing of investors like Cathie Wood, the industry is sure to attract continued interest and investment in the years to come.

Tether Q3 Attestation: 85.7% Cash Reserves, $330M Loan Cut, $670M Research Spend

In a newly published assurance opinion, Tether Holdings Limited disclosed its financial standing for Q3 2023, substantiated by a comprehensive assessment conducted by BDO, a globally recognized independent public accounting entity. The attestation, dated October 31, 2023, reaffirms the veracity of Tether’s Consolidated Reserves Report (CRR) as of September 30, 2023, offering a detailed breakdown of the assets maintained by the Group.

Reserve Composition and Liquidity Maintenance

A notable revelation from the CRR is the record percentage of reserves Tether now holds in Cash and Cash Equivalents (C&Ceq), marking a historic 85.7%. A significant portion of these reserves, amounting to US$ 72.6 billion, is held in US Treasury Bills, depicting both direct and indirect exposure. This strategic allocation accentuates Tether’s ongoing commitment to ensuring liquidity and fostering stability within the broader stablecoin sphere.

Prudent Financial Management

Further emphasizing prudent financial management, the report elucidates a substantial contraction in secured loans extended by Tether, exceeding $330 million, augmenting confidence in the firm’s judicious asset management approach. This reduction aligns with Tether’s publicly declared ambition of diminishing, and eventually eliminating, secured loan exposure from its reserves, leveraging its surplus reserves and undistributed profits to attain this objective.

Investment in Research and Excess Reserves

Tether’s financial disclosure also unveiled investments exceeding $670 million in Q3 2023, and over $800 million year-to-date, funneled into industry-aligned research domains. Although these investments are external to the reserves backing the issued tokens, they showcase Tether’s long-term vision and resilience, particularly amid fluctuating gold and Bitcoin valuations. The report confirmed a stable excess reserves buffer, in spite of market volatilities, with a fair value evaluation causing a diminution of US $116 million for gold inventory and US $195 million for Bitcoin positions as of end Q3 2023.

Independent Verification and Assurance

BDO’s independent attestation reinforced that Tether’s consolidated assets, evaluated at a minimum of US$ 86.4 billion, surpassed its consolidated liabilities amounting to US$ 83.2 billion, with US$ 83.15 billion pertaining to digital tokens issued. This positive assessment underscores the robust financial health of Tether Group, even as it continues to diversify its investment portfolio into sustainable energy, Bitcoin mining, data, and P2P technology, with Q3 2023 investments in these sectors reaching nearly US$ 669 million, totaling around US$ 809 million since the onset of the year.

The Q3 attestation stands as a testament to Tether’s unwavering commitment to transparent and responsible financial stewardship, fortifying its position as a credible and stable entity in the crypto-finance ecosystem.

SEC Delays Decision on Invesco and Galaxy Digital's Ether ETF

Invesco and Galaxy Digital have proposed a spot Ether (ETH) exchange-traded fund (ETF), and the United States Securities and Exchange Commission (SEC) has recently extended the period for making a decision about whether or not to approve or disapprove of the proposal. It is clear that the Securities and Exchange Commission (SEC) will continue to exercise caution with regard to financial products that are based on cryptocurrencies.

On the Cboe BZX Exchange, the proposal in issue calls for the listing of shares of the Invesco Galaxy Ethereum ETF and the trading of such shares. Should it be authorized, this exchange-traded fund (ETF) would be among the very first of its type. It would provide investors with the opportunity to obtain exposure to Ether, the cryptocurrency that is responsible for powering the Ethereum blockchain, via a regulated financial instrument.

In the beginning, it was anticipated that the SEC would reach a ruling by the 23rd of December in 2023. However, in a notification that was sent on December 13, the Commission declared that it would need further time to consider the plan. As a result, the deadline was extended to February 6, 2024. The SEC is now able to conduct a comprehensive analysis of the effects that such a financial product would have on the market and the protection of investors thanks to this extension.

The resolution to prolong the assessment time brings to light the continuing discussions that the Securities and Exchange Commission is having over the incorporation of cryptocurrency products into the conventional financial system. Although the cryptocurrency community is anxious for such products, the Securities and Exchange Commission (SEC) has taken a cautious attitude because it is concerned about market volatility, regulatory compliance, and investor protection in the cryptocurrency sector, which is relatively young and is always growing.

When it comes to the acceptability of cryptocurrencies by the general public, the establishment of an Ether exchange-traded fund (ETF) would be a big milestone. It would give investors with a regulated and perhaps less hazardous channel to obtain exposure to Ethereum, which is not simply a cryptocurrency but also a platform for decentralized apps and smart contracts. This would be something that investors could take advantage of.

Following the announcement that the deadline for the SEC’s judgment on the Invesco Galaxy Ethereum ETF has been set for the beginning of 2024, market players and cryptocurrency aficionados are keeping a careful eye on this development. It is quite probable that the conclusion will have significant repercussions for the future of cryptocurrency investments as well as the wider use of blockchain technology in the financial sector.

Spot Bitcoin ETFs: A Pivotal Decision by SEC Awaits

Investment management firms, stock exchanges, and the U.S. Securities and Exchange Commission (SEC) have been in final discussions regarding the approval of spot Bitcoin Exchange-Traded Funds (ETFs), a long-awaited development in the crypto industry. Recently, the SEC engaged in meetings to finalize wording changes on filings for these ETFs, a critical step that could lead to the first-ever U.S. approval of the funds. The focus has been on the S-1 prospectus documents necessary for every ETF, with issuers anticipating final approval by late Tuesday or Wednesday of the next week.

Notably, the SEC sought minor amendments in some applications, such as fee disclosures or identities of market-makers for the ETFs. These updates were due on a Monday, with public disclosure expected on the same day. This move indicates the SEC’s commitment to transparency and regulatory compliance in the evolving cryptocurrency market. Additionally, the SEC’s involvement in finalizing 19b-4 filings, outlining rule changes necessary for launching spot Bitcoin ETFs, demonstrates its proactive approach in shaping the cryptocurrency investment landscape.

The crypto community has been eagerly anticipating the SEC’s decision, with industry analysts estimating a 98% chance of approval. This optimism stems from the SEC’s active engagement with potential issuers during the busy holiday season, aiming to streamline the final details and structure the creation and redemption procedure of these ETFs. BlackRock, one of the leading financial services firms, recently filed its fourth amendment to its application, preparing to seed its Bitcoin ETF with $10 million.

However, there are complexities associated with the launch of such ETFs. The SEC has requested that issuers have their authorized participant agreement ready, which describes the role of creating and redeeming ETF shares. This role requires a deep understanding of digital assets and the capability to provide safekeeping, custody, and compliance with various regulatory requirements. The challenge is amplified given that not many traditional brokerages are equipped to handle these responsibilities.

Investor sentiment has been influenced by the impending decision, causing price volatility for Bitcoin and related ETFs. This fluctuation reflects a mix of profit-taking after substantial gains in 2023 and investor uncertainty regarding the SEC’s decision. Analysts predict that Bitcoin’s price could surge upon SEC approval, but a rejection could lead to a significant drop, as issuers might be asked to meet more stringent requirements.

In parallel, other regions, like Hong Kong, are making strides in the realm of spot Bitcoin ETFs, albeit following a more conventional regulatory approach. The Hong Kong Securities & Futures Commission has been methodically progressing, first issuing virtual asset management licenses and then virtual asset exchange licenses. This step-by-step approach contrasts with the more dynamic and uncertain regulatory landscape in the U.S..