First Mover Americas: Investors Pull Coins From Bitcoin Funds

0
20

 ​

Jenny Johnson

President and CEO

Franklin Templeton

Jenny will discuss developing crypto-linked investment products in a bear market, the mood among her clients and her lon…

Secure Your Seat

Jenny Johnson

President and CEO

Franklin Templeton

Jenny will discuss developing crypto-linked investment products in a bear market, the mood among her clients and her lon…

Jenny Johnson

President and CEO

Franklin Templeton

Jenny will discuss developing crypto-linked investment products in a bear market, the mood among her clients and her lon…

Secure Your Seat

Jenny Johnson

President and CEO

Franklin Templeton

Jenny will discuss developing crypto-linked investment products in a bear market, the mood among her clients and her lon…

This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

Bitcoin funds are bleeding coins even as U.S. bank failures fuel expectations of an early Federal Reserve pivot in favor of liquidity easing. Usually, if the Fed doesn’t raise rates aggressively like it has been doing, risky assets like bitcoin benefit, but the opposite is occurring with the bitcoin funds. Data tracked by ByteTree Asset Management shows the number of coins held by close-ended funds, spot and futures-focused exchange-traded funds in Europe, the U.S. and Canada has declined by 16,560 BTC ($409 million) this month, reaching a 17-month low of 826,113 BTC. ETFs and other investment vehicles that allow taking exposure to bitcoin without having to own the cryptocurrency are widely considered a proxy for institutional activity.

Bankrupt cryptocurrency exchange FTX transferred $2.2 billion to founder Sam Bankman-Fried through various entities, the firm’s new management said. A total of $3.2 billion was paid to Bankman-Fried and other key employees, according to a financial report filed Wednesday. The next largest beneficiary after Bankman-Fried was Nishad Singh, FTX’s former director of engineering, who received about $587 million. In February, Singh pleaded guilty to charges including fraud and conspiracy for his role in FTX’s collapse. The payments were made predominantly from the Bankman-Fried-owned trading firm Alameda Research, whose precarious finances set the wheels in motion for FTX’s collapse in November.

U.S. Securities and Exchange Commission Chairman Gary Gensler is doubling down on his opinion that proof-of-stake tokens could meet the definition of securities under the Howey Test, thus bringing them under his agency’s regulatory authority. Speaking to reporters after a commission vote on Wednesday, Gensler said securities laws could be triggered because investors anticipate a return when they purchase tokens underpinned by a proof-of-stake consensus mechanism. The Block first reported the news.

(TradingView)

The chart by CryptoCompare shows that bitcoin’s 1% market depth for BTC/USD pair or collection of buy and sell offers is within 1% of the mid-price or the average of the bid and the ask/offer prices.

The market depth tanked to fresh multi-month lows over the weekend after USDC lost its dollar peg, making it harder for traders to execute large orders at stable prices.

“Coinbase’s BTC-USD liquidity (which is a unified market for USD and USDC on Coinbase) saw a sharp decline of its 1% market depth which was more severe than when FTX collapsed. 1% market depth fell from 846 BTC on the 10th to 417 BTC on the 11th, a 50.7% decline,” CryptoCompare said in a report on Tuesday.

Deterioration in liquidity, as measured by market depth, means a few big orders can trigger outsized price moves in either direction.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here