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- BlackRock Planning to Acquire $10 Million Worth of Bitcoin Today : Decoding The Possibilities 💰🪙
BlackRock Planning to Acquire $10 Million Worth of Bitcoin Today : Decoding The Possibilities 💰🪙
PLUS: CHINA’S TOP NEWSPAPER CALLS FOR GOVERNMENT TO KILL CRYPTO. Hard SEC Data Shows Funds Plan To Invest Up To 15% Of Their AUM To Bitcoin.
Manan Vora
January 04, 2024
Snapshot Web3
January 4, 2024
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Regulatory and Legal News
China's top legal newspaper, Legal Daily, published by the Chinese Communist Party's Central Commission for Political and Legal Affairs, has called for a stricter crackdown on cryptocurrency, emphasizing its use in corruption and bribery. The publication highlighted the views of legal scholars discussing modern forms of corruption, focusing on the use of cryptocurrencies and electronic gift cards as conduits for bribery. The scholars described digital assets as "hidden channels" for corruption, pointing out that they can be easily transferred across borders and converted into tangible wealth, posing a significant challenge to anti-corruption efforts. China has a complex relationship with digital currencies, embracing blockchain technology while maintaining a harsh stance on cryptocurrencies. The government's development of the digital yuan (e-CNY) reflects its commitment to digitalizing its currency on its own terms. China's ban on non-government-approved cryptocurrencies in September 2021 had a significant impact on the global crypto landscape, and despite the ban, China's interest in digital currencies, especially the digital yuan, remains strong.
South Korea's Financial Services Commission (FSC) has proposed an amendment to the credit finance act, aiming to restrict local citizens from using credit cards to purchase cryptocurrencies. The amendment is designed to limit crypto traders from buying digital assets on foreign exchanges, citing concerns about illegal outflows of domestic funds, money laundering, and speculative behavior. The regulator plans to gather public feedback on the proposal until February 13, with the goal of reviewing and voting on its implementation in the first half of 2024. South Korea had previously enforced a 2021 amendment requiring crypto users to trade using verified accounts on local exchanges.
The city of Incheon in South Korea has reportedly confiscated $375,000 worth of cryptocurrencies from 298 residents who were accused of tax evasion. The city is conducting a crackdown on crypto-holding tax evaders, and individuals facing tax bills and associated fines will likely be given the option to pay or have their seized coins liquidated and sold. In FY 2023, Incheon raised over $43.6 million from tax evaders, and it plans to continue strict collection operations against those evading taxes. The crackdown involves both central and local tax agencies, equipped with new monitoring tools.
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Innovation and Launches
The European Central Bank (ECB) shared a report detailing the progress made in the development of the digital Euro. The report focuses on advancements within the Rulebook Development Group (RDG) and outlines the rights and obligations of members under draft legislation. The RDG includes representatives from consumer, individual seller, and intermediary sectors, and an interim assessment was conducted by its members. The ECB stated that the draft rulebook would be flexible enough to meet future regulations and would be updated according to the outcome of the legislative process. The report also highlighted the role of existing intermediaries, such as banks or payment service providers, in bridging the gap between the central bank and end-users in the digital Euro environment.
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NFT, Gaming and Metaverse
In 2023, amid a crypto winter prompting many brands to distance themselves from web3, Puma under the leadership of Ivan Dashkov, its head of emerging technology, remained committed to web3. Puma sees web3 as a transformative shift in internet usage and aims to position itself as an early participant in the crypto-friendly future. Puma's venture into web3 began with registering its first Ethereum Name Service (ENS) domain, and by June 2023, it entered the metaverse with the launch of Black Station and Black Station 2. Despite modest tech revenues, Puma's persistence in web3 underscores its strategic foresight and a commitment to early adoption in the evolving digital landscape.
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Scams and Hacks
Radiant Capital recently experienced a flash loan attack resulting in a significant loss of $4.5 million, as reported by BeosinAlert. The attack exploited a vulnerability in the contract, manipulating the index parameter through a rounding issue, leading to a cumulative precision error. The attacker strategically inflated the index parameter to enable profitable maneuvers. Despite the incident, Radiant Capital's response has been proactive, with the team temporarily pausing lending/borrowing markets on Arbitrum for investigation. The token's price has remained stable at $0.329, reflecting the community's confidence in Radiant Capital's resilience and the effectiveness of measures taken by the Radiant DAO Council.
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Funding and Acquisitions
The U.S. Securities and Exchange Commission (SEC) is witnessing a notable shift among funds, traditionally investing in securities, as they amend their prospectuses to allocate up to 15% of their assets under management (AUM) to Bitcoin. This change suggests growing bullish sentiment among institutional investors towards Bitcoin and possibly other crypto derivatives. Several funds, including Advisors Preferred Trust and Arca Asset Management Trust, have amended their prospectuses to enable investments in Spot Bitcoin through Grayscale and ProShares Bitcoin Strategy ETF. While the SEC has expressed concerns about market manipulation and investor protection, the increasing interest from institutional investors may prompt a reconsideration of spot Bitcoin ETF approvals in 2023.
BlackRock, a global asset management giant, is reportedly planning to acquire $10 million worth of Bitcoin, signaling its intention to strengthen its position in the competition to launch the first spot Bitcoin ETF in the United States. Market research analyst James Seyffart revealed this information, sourced from BlackRock's updated S-1 amendment form, aligning with his prediction of ETF approval in January. Bloomberg analyst Eric Balchunas notes the substantial increase in BlackRock's Bitcoin seed funding from $100,000 in October, signaling expectations for a potential ETF release shortly after. However, conflicting dates and SEC deadlines add uncertainty to the timing of BlackRock's Bitcoin purchase and potential ETF launch. The crypto community is eagerly awaiting further developments with heightened anticipation and speculation.
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Interesting Reads
In 2023, the Asia-Pacific (APAC) region emerged as a powerhouse for Web3 innovation and adoption, showcasing notable momentum and energy in the crypto space. APAC investments in Web3, media, and events have been on the rise, with Singapore-based Foresight Ventures acquiring The Block for $70 million and APAC media companies like Blockhead and Coinlive gaining prominence. TOKEN2049 in Singapore became the world's largest Web3 event in 2023, emphasizing the region's influence. APAC financial institutions, including UBS and HSBC, have made significant moves to bridge the gap between traditional finance and DeFi. The region has also demonstrated clear and consistent regulatory guidelines, fostering a supportive ecosystem for crypto growth. Looking ahead to 2024, the APAC region is expected to play a crucial role in SocialFi adoption, given the familiarity and experience with social media platforms in the region. SocialFi, particularly in the form of Web3 initiatives tapping into the untapped market of SocialFi, represents a significant opportunity for APAC in the coming years.
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Price Action
Matrixport's latest report has predicted that the U.S. Securities and Exchange Commission (SEC) may reject all Bitcoin spot exchange-traded funds (ETFs) in January, and final approval might not occur until Q2. The report also forecasts a potential Bitcoin price drop to the range of $36,000 to $38,000. Matrixport recommends investors hedge their positions by acquiring put options or taking a direct short position on Bitcoin. Following this report, the broader crypto market experienced a brief downturn, with Bitcoin briefly dipping below $41,000 and Ethereum falling below $2,100. However, Bloomberg ETF Analyst Eric Balchunas expressed optimism, stating that they have heard nothing to indicate anything but approval, and he still thinks the chance of passage is as high as 90%. Other sources, including Greekslive, reported a diminishing likelihood of ETF approval this week, indicating increased skepticism in the market. The unfolding developments around Bitcoin spot ETFs will likely shape the market's trajectory in the coming weeks.
The flash crash in Ethereum's price to $2,050 on January 3, resulting in a 14% correction, raised questions about the significance of this correction and whether it signals the end of bullish momentum. The sudden drop led to the liquidation of $100 million worth of ETH long futures contracts. However, the price swiftly recovered to $2,230, suggesting that the panic selling and derivatives liquidations have weakened. Some attribute the trigger to a market analysis pointing to the potential denial of a spot Bitcoin ETF, published by Matrixport, but others believe the market was overbought, and buyers were using excessive leverage. Data from Ether options volume indicates reduced demand for protective strategies, reinforcing excessive optimism observed in the Ether futures markets. The cause of the flash crash may never be definitively determined, but from a derivatives perspective, the market appears healthier.
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Miscellaneous
As the crypto winter begins to thaw, there's a growing interest in fundraising through extended seed rounds in the cryptocurrency industry. Extended seed rounds allow startups to access fresh investor capital without meeting the stricter requirements of Series A funding, which has become more challenging during bear markets. In crypto, Series A rounds may not follow the traditional path of appointing a board and issuing shares, often serving as a piece of marketing. Investors are currently more cautious, and the bar for Series A funding has risen significantly. Extended seed rounds provide a way for startups to attract operational funding without diluting equity, which can happen when new investors are brought in, reducing the founder's ownership percentage. The interest in extended seed rounds also indicates a strategic choice for regional diversification among funds, considering the current market's volatility and limited liquidity in altcoins.
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The information provided in this newsletter is for informational purposes only and should not be interpreted as investment advice, endorsement, or recommendation. Cryptocurrency investments carry significant risk due to their volatility. You should consider your financial situation, investment goals, and risk tolerance before making any investments. We strongly recommend consulting a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
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