March 6, 2024

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BlackRock's IBIT ETF Achieves Record Inflows as Bitcoin Soars to New Heights

BlackRock's IBIT spot Bitcoin ETF saw unprecedented inflows of $788.3 million on Tuesday, coinciding with Bitcoin hitting a new all-time high above $69,000, surpassing its prior record inflows and contributing to a total of $648.4 million net inflows for all U.S. spot Bitcoin ETFs, despite substantial outflows from Grayscale's GBTC fund. This surge has pushed IBIT's assets under management to about $11.5 million, with the collective assets of U.S. spot Bitcoin ETFs reaching around $50 billion. The ETFs, excluding GBTC, now hold over 350,000 BTC, with IBIT leading with nearly 174,000 BTC. Trading volume also set a new record of $9.75 billion on Tuesday, driven primarily by IBIT, as Bitcoin’s price soared to a new peak, only to experience a sharp drop, leading to significant liquidations. The event marked a significant milestone for the relatively new spot Bitcoin ETFs, highlighting their growing influence and the volatile nature of the Bitcoin market.

Hong Kong Delegate Proposes Web3 Financing Platform to Unite Greater Bay Area

Johnny Ng, a Hong Kong delegate to China's central political advisory body, has proposed the creation of a Web3 financing platform across the Greater Bay Area, linking Hong Kong, Macao, and Guangdong. This suggestion aligns with Hong Kong's ambitions to become a crypto hub and contrasts with the mainland's crypto restrictions. Ng's proposal highlights the potential for Hong Kong's regulated crypto trading platforms to fund blockchain and digital asset projects within this integrated financial ecosystem. This initiative comes as China expresses interest in formulating web3 development strategies, indicating a potential shift towards embracing decentralized technologies and digital identities despite its current ban on crypto trading and mining.

SEC Delays Decision on Ether ETFs, Seeks Public Input

The SEC has postponed its decision on Ether (ETH) ETF applications from BlackRock and Fidelity, initiating comment periods for both. The regulator seeks public input on whether the rationale behind the recently approved spot Bitcoin ETFs applies to proposed Ether ETFs, focusing on susceptibility to manipulation and the comparability of spot and futures Ether products. Analyst James Seyffart highlighted that continued delays are expected until a significant date of May 23, when a final decision is anticipated. Recent documentation updates from issuers, reflective of lessons from the Bitcoin ETF approval process rather than direct SEC feedback, suggest ongoing uncertainty. However, any future updates indicating direct regulator feedback could signal a more positive outlook for the approval of Ether ETFs, despite the SEC's typically reserved communication approach.

Trading Desk Insights

Bitcoin achieved an unprecedented peak yesterday, soaring to $69,325, only to swiftly retreat towards $59,500, diverging from past cycles and triggering $1 billion in liquidations. The sell-off appears to stem from profit-taking at historical highs, although data indicates robust inflows into spot BTC ETFs. This overnight correction from record levels has purged excessive leverage from the market, restoring stability to funding rates in the crypto perpetual futures market.

Developers argue that Bitcoin fundamentals are stronger in this cycle compared to previous ones, citing the introduction and adoption of Ordinals technology. Ordinal NFTs embedded in the Bitcoin blockchain have facilitated $3.6 billion in BTC payments over the past 6 months alone.

Examining ETF flows, we've observed the third-highest net inflow figure of $648.4 million, despite Grayscale's outflows amounting to $332.5 million. BlackRock continues to impress, attracting a remarkable $788.3 million.

Meme coins faced substantial losses, with PEPE and DOGE plummeting over 30% due to liquidity constraints. However, the memecoin craze has regained momentum this morning, with WIF surging by 33%, FLOKI by 21%, and PEPE by 19%. WIF recorded nearly $1 billion in trading volume over the past 24 hours, becoming the first major meme token with a price exceeding $1.

In the U.S. stock market, futures advanced on Wednesday, buoyed by the recovery of technology stocks following consecutive declines on Wall Street. Large-cap tech names were offloaded by investors, contributing to Tuesday's losses, marking the tech sector's worst day since January 2nd.

Fed Chair Jerome Powell, in prepared remarks for Capitol Hill appearances, reiterated policymakers' vigilance regarding inflation risks and their cautious approach to monetary policy adjustments. Powell emphasized the need to avoid premature rate cuts, which could exacerbate inflationary pressures, while delaying action could hinder economic growth. "The Committee does not anticipate reducing the target range until it has greater confidence that inflation is steadily approaching 2 percent," Powell stated.

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