May 15, 2024

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Circle Plans Redomiciliation to US Ahead of Potential IPO

Stablecoin issuer Circle is planning to redomicile from Ireland to the United States, as confirmed by a spokesperson. This move coincides with Circle's filing for an initial public offering (IPO) of its equity securities in January. The redomiciliation could be driven by factors such as the U.S.'s higher tax burden compared to Ireland's low corporate tax rates, making it a more attractive base for an IPO. Circle submitted a draft registration statement S-1 form to the U.S. Securities and Exchange Commission for the IPO, with details on share quantity and pricing pending SEC review. Circle's USDC stablecoin ranks second in market capitalization after Tether's USDT, standing at $32.9 billion. Despite previously planning to go public through a merger with Concord Acquisition Corp., Circle's current IPO plans signal a strategic shift in its path to becoming a publicly traded company. Notable investors in Circle include financial giants like Fidelity and BlackRock.

Wisconsin Investment Board Reveals Nearly $100M Investment in BlackRock's Bitcoin ETF

Wisconsin's investment board revealed its holdings in BlackRock's Bitcoin ETF through a 13F filing with the SEC, showing an investment of $99 million in IBIT, which translates to approximately 2.4 million shares. The filing also disclosed the board's ownership of around one million shares of Grayscale's Bitcoin ETF. The board manages the Wisconsin Retirement System and State Investment Funds among other funds, emphasizing their success in generating returns and maintaining trust. SWIB declined to comment on the disclosed holdings. Investment managers must disclose holdings in 13F forms if managing $100 million or more. Other investment managers like BNY Mellon and BNP Paribas also disclosed holdings but in smaller amounts compared to Wisconsin's disclosure. Quattro Advisors and Wolverine Asset Management reported substantial holdings in Bitcoin ETFs as well.

MicroStrategy, Biggest Bitcoin Holder Joins Global Equity Index

MicroStrategy, with Bitcoin holdings worth $13.5 billion, will join the MSCI World Index on May 31. MSCI, a global investment decision support provider, highlighted MicroStrategy as one of the largest additions to its index by market capitalization. MicroStrategy's recent Bitcoin acquisitions, totaling 214,400 BTC, were made at an average price of $35,180 per Bitcoin, resulting in a paper profit of around $6 billion. The company's stock has seen a significant rise, outperforming Bitcoin's gains in 2024. MicroStrategy has become a proxy for Bitcoin exposure in traditional markets, especially before the launch of spot Bitcoin ETFs in the US. Its inclusion in the MSCI World Index reflects the growing influence of Bitcoin exposure in traditional portfolios.

Vanguard appoints Bitcoin-friendly former BlackRock ETF lead as CEO

Vanguard has appointed Salim Ramji, a former BlackRock executive known for his Bitcoin-friendly stance, as its new CEO effective July 8. Ramji, with 25 years of experience, previously led BlackRock's global ETF business and was involved in launching IBIT spot Bitcoin ETF in the U.S. His appointment comes after Tim Buckley's decision not to offer spot Bitcoin ETFs at Vanguard. Ramji aims to steer Vanguard to meet changing investor needs while staying true to its mission. Buckley, who is retiring, praises Ramji's commitment to investor interests. Vanguard's previous stance on Bitcoin, characterized by its avoidance of U.S. spot Bitcoin ETFs, has drawn criticism but also sparked speculation about a potential shift.

Trading Desk Insights

Bitcoin is no longer moving in sync with meme stocks like it did three years ago. However, the current activity in the stock market could be signaling an impending major rally in cryptocurrencies. Despite its speculative nature, the narrative of Bitcoin as a store of value has been solidified with the introduction of ETFs. Its holder base has expanded significantly and now includes more institutional investors, which should help stabilize its price over the long term. There are clear indications that the market is starting to take Bitcoin more seriously.

The price movements are particularly promising, indicating a potential breakout. Bitcoin's rise above its 20-day moving average is a strong positive signal. Our next milestone is the 50-day moving average at around $65,500. Reaching this would confirm a breakout from an inverted Head-and-Shoulders pattern, a critical reversal indicator that could propel prices to annual highs.

Turning to the U.S. BTC ETFs, we've seen significant inflows totaling $100.5 million, bolstered by ARK's substantial contributions of $133.1 million, despite Grayscale recording outflows of $50.9 million.

The institutionalization of Bitcoin continues to advance:

  • Deutsche Bank is partnering with the Monetary Authority of Singapore on Project Guardian to explore asset tokenization.
  • The State of Wisconsin Investment Board has invested $99 million in BlackRock's spot Bitcoin ETF.
  • Swiss Bank UBS, Switzerland's largest bank, now holds shares in BlackRock's Spot Bitcoin ETF.
  • The Bank of Montreal, Canada's fourth-largest bank, has disclosed its holdings in a spot Bitcoin ETF.
  • JPMorgan Chase, the largest bank in the U.S., has purchased spot Bitcoin ETFs.
  • Wells Fargo, the third-largest bank in America, has also invested in a spot Bitcoin ETF.
  • Susquehanna, a $438 billion asset manager, has a $1.3 billion Bitcoin ETF portfolio.
  • BNP Paribas, Europe's second-largest bank, has acquired shares in BlackRock's spot Bitcoin ETF.

As the crypto market sentiment improves and optimism grows, bridge volumes have surged since September 2023. Weekly bridge volumes have jumped by 70% from $178 million to $304 million. A three-month analysis of net flows shows a shift of funds from Ethereum to Layer 2 solutions like Arbitrum, Optimism, and Base.

In other financial news, stock futures rose Wednesday following a consumer price index (CPI) report that was more favorable than anticipated. The CPI, a key inflation metric for the Federal Reserve, increased by 0.3% in April, below the expected 0.4%. The year-over-year rise was 3.4%, aligning with forecasts. Core CPI figures, which exclude food and energy costs, also met expectations. Fed funds futures now indicate a 51.7% chance of a rate cut by the Fed in September, up from 44.9% the previous day.

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This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.

Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.

The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.

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Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.

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