Bitcoin tops K, Ether up on Dencun upgrade optimism
Bitcoin tops K, Ether up on Dencun upgrade optimism

Key findings

  • Bitcoin rose to an all-time high above $69,000 last week and jumped above $72,000 on Monday morning as spot bitcoin ETF activity remains high.
  • MicroStrategy bought more bitcoin, driving its shares, while Blackrock’s spot bitcoin ETF IBIT continued to see big inflows.
  • After the SEC announced a settlement with former crypto exchange ShapeShift, two commissioners from the agency questioned the lack of regulatory clarity for the US industry
  • During a congressional hearing, Federal Reserve Chairman Jerome Powell indicated that the central bank is not close to introducing a central bank digital currency.
  • This week, some of the attention may shift from Bitcoin to Ethereum as the alternative crypto network is slated to upgrade Dencun.

What happened in the crypto markets last week?

Bitcoin (BTC) jumped above another price milestone, passing $72,000 this morning on the back of last week’s price momentum when it hit two all-time highs. Ether, meanwhile, rose steadily above $4,000 amid optimism around lower fees following Dencun’s long-awaited upgrade to the Etherum network, which will help improve transaction processing speeds at scale, this Wednesday.

Meanwhile, two SEC commissioners have explained their displeasure with how the crypto industry is regulated in the US, and Federal Reserve Chairman Jerome Powell has made it clear that there are no immediate plans to launch a central bank digital currency (CBDC) for the US dollar.

Bitcoin hits new all-time high on ETF backdrop

The launch of a spot bitcoin ETF in the US, as well as the upcoming halving event, have been credited for bitcoin’s recent rally to multiple all-time highs. Although after each of the highs, the largest cryptocurrency by market capitalization fell significantly before regaining some of those gains.

Bitcoin broke above $72,000 on Monday, likely on the back of optimism surrounding the UK regulator easing its stance on allowing cryptocurrency exchange-traded notes (ETNs) in the country.

“The Financial Conduct Authority will not object to requests from Recognized Investment Exchanges (RIEs) to establish a UK listed market segment for crypto-asset-backed exchange-traded notes (cETNs). These products will be available to professional investors, such as investment firms and credit institutions, authorized or regulated to operate only in the financial markets,” the London Stock Exchange said in a statement.

Blackrock’s Bitcoin ETF, MircoStrategy are big buyers of Bitcoin

Blackrock’s iShares Bitcoin Trust (IBIT) has become a major hub of bitcoin trading activity over the past few months, as its bitcoin holdings temporarily surpassed MicroStrategy’s (MSTR) last week. However, MicroStrategy announced the acquisition of another 12,000 bitcoins on Monday, bringing their current balance to 205,000.

Additionally, the nine new ETFs have grown to a combined size larger than Grayscale Bitcoin Trust (GBTC), according to BitMEX Research. GBTC has seen over $10 billion in outflows since its ETF conversion. It should be noted that Grayscale’s offering has much higher fees of 1.5% compared to the other nine spot bitcoin ETFs currently on the market.

The price of Bitcoin provides gains for some crypto-related stocks

MicroStrategy’s bet to buy Bitcoin is paying off in spectacular fashion. Shares of MicroStrategy rose 16% to around $1,650 in early afternoon trading on Monday. Shares are up more than 600% in the past year and are up about 140% since the start of 2024.

According to MircoStrategy Executive Chairman Michael Saylor, the company’s stock is a good option for investors looking for Bitcoin exposure.

“If you are curious about Bitcoin right now and want to buy Bitcoin at an all-time high, how do you get the benefit of Bitcoin with downside protection? MicroStrategy sold $800 million in debt and we have $12-13 billion in bitcoin on the balance sheet,” Sayler said CNBC in an interview on Monday. “If you’re a bitcoin maximalist and you love bitcoin and you want it to hold forever, ETFs charge you 25 basis points, MicroStrategy goes up—we give you a return against your stocks in a tax-efficient way.”

Coinbase (COIN) is another stock benefiting from the Bitcoin rally. Despite problems due to massive trading volumes over the past few weeks, shares of the cryptocurrency exchange have risen more than 15% in the past five days and have gained about 70% since the start of the year.

SEC Commissioners Criticize Agency’s Crypto Stance

The Securities and Exchange Commission’s (SEC) action against former digital asset trading platform Shapeshift has come under fire from the regulator’s own commissioners.

While ShapeShift agreed to pay $275,000 for allegedly facilitating trades in unspecified digital assets considered securities, SEC Commissioners Hester Peirce and Mark Uyeda questioned the lack of clarity around which tokens are considered securities. They argued that the ambiguity makes it challenging for crypto firms to recognize regulatory compliance, potentially stifling innovation.

“Cases like this do not protect investors; they intimidate innovators and entrepreneurs,” Perce and Uyeda said. “We respectfully disagree.”

The commissioners’ statement reflects frustration with companies such as Coinbase and Kraken, which have also been sued by the SEC for operating unregistered securities exchanges.

Fed Chairman Powell says there’s no reason to worry about CBDC

During congressional testimony last week, Federal Reserve Chairman Jerome Powell addressed concerns surrounding the potential development of CBDCs in the US.

“We are nowhere near recommending or adopting a central bank digital currency in any form,” Powell said.

Powell aimed to quell speculation that a CBDC could allow the Federal Reserve to compete directly with private banks or monitor personal financial transactions, stressing that any digital currency ventures would work through the existing banking system. His remarks come amid legislative efforts to prevent the Fed from issuing CBDCs without congressional approval, reflecting ongoing debates surrounding privacy and the implications of central bank-backed digital currencies on the financial landscape.

What to expect from Ether Network Upgrade

Ether (ETH) has now reached $4,000 for the first time since December 2021 as the network is scheduled to undergo an upgrade known as Deneb-Cancun or Dencun this week. Ether rose more than 4% on Monday and has gained more than 70% since the start of the year.

According to Fidelity Digital Assets, the upgrade is expected to dramatically reduce fees for various second-layer network protocols that are built on top of the underlying Ethereum blockchain.

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