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- 🥜 Will we really get an Ethereum ETF?
🥜 Will we really get an Ethereum ETF?
PLUS: Will Coinbase Win?
Today’s edition is brought to you by BitDegree.
GM to all 38,503 of you. Crypto Nutshell #211 burstin’ in. 🦬 🥜
We’re the crypto newsletter that's less perplexing than navigating the complex politics of a futuristic city-state... 🏙️🤖
What we’ve cooked up for you today…
🤔 What are Coinbase’s odds of winning against the SEC?
🦄 Will we get an Ethereum ETF?
📈 Here come the stablecoins
💰 And more…
MARKET WATCH ⚖️
Prices as at 5:25am ET
Only the top 20 coins measured by market cap feature in this section
WILL COINBASE WIN AGAINST THE SEC? 🤔
BREAKING: Coinbase has 70% chance of winning against SEC according to Bloomberg analyst
Two days ago Coinbase and the SEC faced off against each other in court. 🥊
Now, an analyst from Bloomberg has placed Coinbase’s chance of winning against the SEC at 70%.
Bloomberg Senior Litigation analyst, Elliot Stern, shared his thoughts on the Coinbase case:
“I went into SEC v. Coinbase hearing thinking COIN would, on this motion, win dismissal of SEC’s primary claims (concerning trading) but maybe not staking and broker claims. I left thinking COIN would win full dismissal”
Stern mentioned that Judge Failla wanted the SEC to define what the term “investment contract” means.
The definition provided by Coinbase was more compelling:
“The judge wanted a limiting principle to the SEC definition of ‘investment contract’... We view the one offered by Coinbase as more compelling, requiring investment in a business vs just an ecosystem, along with an enforceable obligation.”
Stern also states that the Ripple ruling in July would be key in Coinbase’s victory.
The Ripple case made it clear that the sale of digital assets on exchanges don’t neatly fit into the Howey test.
(The Howey test determines what classifies a security, created in 1946… it may be time for an update?)
As for when we can expect a decision on this case, Stern estimates by the end of quarter 2.
If we do see a win by Coinbase, this would be a major catalyst for crypto markets. One that definitely isn’t being priced in by the market…
We’ll keep you posted on any updates. 😎
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WILL WE GET AN ETHEREUM ETF? 🦄
BlackRock announced their application for a spot Bitcoin ETF on June 16, 2023.
At the time Bitcoin was trading at $26,000.
Bitcoin then traded all the way up to over $47,000 on the day of the ETF approval.
A price increase of over 80%.
Now we get to play the game all over again. This time with an Ethereum ETF.
But will an Ethereum ETF actually be approved?
Time for a deep-dive. 🤿
The first deadline for a decision on an Ethereum ETF is May 23, 2024.
However, this time around, analysts aren’t as confident. For example, Bloomberg ETF analyst Eric Balchunas only puts the odds of approval at 70%. (Down from the 90% chance he gave a spot Bitcoin ETF)
Some experts in the space have concern that Ethereum’s design classifies it as a security.
A managing director at JP Morgan argues the SEC needs to classify Ethereum as a non-security, before we ever see an approval. JP Morgan only have approval odds at 50%.
However, there are hints that the SEC already doesn’t consider ETH a security.
The first clue is that the SEC has sued multiple crypto exchanges for listing crypto assets they consider to be securities.
However, in none of these lawsuits is Ethereum named as a security.
Interesting… 🤔
On top of this, the SEC has already approved the trading of Ethereum futures ETFs.
The whole reason we saw the approval of Bitcoin ETFs was because of Grayscale’s win against the SEC. This lawsuit created precedent that the SEC must treat spot and futures ETF applications the same.
It would be a very bad look for the SEC to deny a spot Ethereum ETF, only to be taken to court again & lose.
TLDR;
An Ethereum ETF approval is definitely not as certain as it was with the Bitcoin ETFs.
However, general consensus is that odds of approval by the May 23rd deadline are over 50%.
On a long enough timeline?
With the precedent set by the Grayscale case, an Ethereum ETF is an inevitability. 🦄
HERE COME THE STABLECOINS 📈
Today we’ll be taking a look at the stablecoin market.
Stablecoin’s play an important role in the wider crypto market. They are often used on centralized and decentralized exchanges to purchase other digital assets.
(Plus they make international payments a million times faster)
As a result, by taking a look at the stablecoin market, we can gauge the demand for digital assets.
The chart below tracks the aggregate change in the total stablecoin market cap.
🟢 Increased stablecoin supply: increased demand and capital inflows into the digital asset space 🐂
🔴 Contractions in stablecoin supply: risk-off environments and net capital outflows from digital assets 🐻
🟡 Aggregate Stablecoin Market Cap
October 2023 was the clear turning point.
Since then, the aggregate stablecoin supply has experienced constant growth. 📈
In fact, stablecoins recently experienced monthly inflows of $4.17 billion.
The largest monthly inflow we’ve seen since March 2022…
(liquidity is back)
This puts the aggregate stablecoin market cap at $128 billion today.
(Still a long way off the all-time high at $161 billion)
Here’s the crazy part though.
Tether alone accounts for 74% of the entire stablecoin market cap. Clearly the favourite. 😱
All in all stablecoin growth is a positive, bullish indicator.
Bull markets are often categorised by large expansions in the stablecoin supply (checkout those green peaks in 2021).
So we’ll definitely be checking in on this metric every now and then, stay tuned.
CRACKING CRYPTO 🥜
Fidelity's Bitcoin ETF joins the $1 billion club in alongside BlackRock. Fidelity's Wise Origin Bitcoin Trust ETF reached a notable milestone of $1 billion in assets under management.
Bitcoin ETFs are ‘stepping away from the ideals’ of crypto — Blockchain execs. Andy Bromberg claimed that Bitcoin ETFs are “Bitcoin with all of the incredible things taken away from it and just leaving the price.”
Tether prints $10B in 3 months, nears exclusive $100B crypto club. Only a handful of cryptocurrencies have ever been worth more than $100 billion. Tether could be next.
WHAT WE’RE READING ✍️
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CAN YOU CRACK THIS NUT? ✍️
Select your answer below and you’ll be redirected to the results page. (answer explanation can be found after “Meme Corner”)
What was Bitcoin's initial block reward? |
MEME CORNER 😂
Because what would the crypto world be without its share of memes?
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Trivia Answer: B) 50 Bitcoin 🥳
The initial block reward was 50 BTC. However, the reward decreases by 50% every 210,000 blocks (aka the halving) and will reach 0 in 64 halvings.
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