March 12, 2024

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Grayscale Proposes New Bitcoin Mini Trust Amid Evolving ETF Landscape

Grayscale has submitted an S-1 registration form to the U.S. Securities and Exchange Commission (SEC) for a new, scaled-down version of its Grayscale Bitcoin Trust, named the Grayscale Bitcoin Mini Trust, with the ticker "BTC." This initiative is a spin-off from GBTC, where GBTC shareholders are set to receive new shares of the mini trust through a distribution, following GBTC's contribution of a specific Bitcoin amount to the trust. The mini trust aims for NYSE listing and will function separately from GBTC, though details about the share distribution percentage were not specified in the filing. GBTC shareholders aren't required to take any action or provide any compensation to receive shares of the new trust upon distribution. This move comes as Grayscale's Bitcoin Trust, converted into a spot Bitcoin ETF in January, commands significant assets, while its market share in cumulative spot Bitcoin ETF trading volume recently hit its lowest, overshadowed by BlackRock and Fidelity's ETFs, which combined dominated 69% of last Friday's total trading volume.

Hong Kong Launches Regulatory Sandbox for Stablecoin Issuers

The Hong Kong Monetary Authority (HKMA) has launched a regulatory sandbox designed to support potential stablecoin issuers by offering a penalty-free testing environment for their operations. This initiative is part of Hong Kong's broader strategy to regulate fiat-backed stablecoins, which are digital currencies pegged to the value of sovereign currencies like the U.S. or Hong Kong dollar. The sandbox is aimed at entities genuinely interested in establishing a stablecoin issuance business within Hong Kong, provided they have a viable business plan and ensure that their operations within the sandbox are limited in scope and manageable in terms of risk. This move, announced in December alongside a call for public opinions on proposed regulatory frameworks for stablecoins, aims to set clear supervisory expectations and gather feedback from participants on the regulatory requirements for issuing fiat-referenced stablecoins in the region.

MetaMask and Mastercard Partner to Launch On-Chain Payment Card with Baanx

MetaMask is exploring a groundbreaking on-chain payment card in partnership with Mastercard, leveraging Baanx for issuance, marking a significant step towards integrating cryptocurrency with mainstream financial systems. This collaboration aims to introduce a novel, decentralized web3 payment solution that enables MetaMask's vast user base, comprising over 30 million monthly active participants, to utilize their crypto holdings for everyday transactions across Mastercard's extensive global network. Such an initiative reflects Mastercard's and Visa's growing engagement with blockchain technologies and self-custody wallet services, underscoring a concerted effort to bridge the gap between traditional finance and the emerging digital asset ecosystem. While MetaMask developer Consensys has not commented on the development, Mastercard reiterates its commitment to innovating within the digital asset space through diverse products and partnerships, aiming to merge the capabilities of Web2 and Web3 seamlessly.

Trading Desk Insights

Bitcoin exhibited volatile trading patterns this morning, initially surging to a new record high of 73,000 following the CPI release, only to retreat to 70,800 amidst a wave of liquidations.

Examining ETF flows, the market absorbed another round of net inflows totaling $505.5 million. Notably, Valkyrie and VanEck experienced record-breaking days with $43.4 million and $118.8 million, respectively. Grayscale recently filed to launch the "Grayscale Bitcoin Mini Trust," anticipating competitive fees. This trust, trading under the ticker $BTC, will emerge as a spinoff from $GBTC.

Over the past 24 hours, open interest has surged for XRP, BTC, AVAX, OCEAN, COMP, and LDO.

The volume of Bitcoin transferred over the past week reached its highest level in 18 months, with miner revenue scaling accordingly. Bitcoin miners are intensifying their efforts to procure equipment and seek locations with low-cost electricity to sustain operations. The resurgence in Bitcoin's price has spurred mining companies to allocate over $1 billion toward new equipment since February 2023.

Presently, fewer than 2,000 new millionaires, or wallets holding $1 million worth of bitcoin, are generated daily. This growth rate pales in comparison to the 2020-21 bull run, indicative of profit-taking activities by investors.

In the broader market, stocks oscillated as investors evaluated the latest U.S. inflation report. The consumer price index rose by 0.4% in February, meeting expectations, and by 3.2% year-over-year, surpassing forecasts of 3.1%. Core inflation also increased by 0.4% in February, compared to estimates of 0.3%. Investors are now awaiting the producer price index report later this week and the Federal Reserve's upcoming monetary policy meeting later this month.

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