Market Update & Industry News - Week ending 15 March 2024

🔷 Ethereum’s (ETH) “Dencun” upgrade completed this week, marking a significant increase towards improving scalability and reducing transaction costs on Layer 2 solutions. This will allow for lower fees when accessing areas such as decentralised finance (DeFi) and non-fungible tokens (NFTs), whilst improving ETH’s adoption in transactions.

Appold view: A successful upgrade with no noticeable deterioration to the network. The reduced transaction fees are a critical benefit of this upgrade. 

🔷 El Salvador, the first country to purchase Bitcoin as a treasury asset in 2021, moved over 5,000 BTC (approximately $400m value) into its own cold storage vault, according to its President, Nayib Bukele. This is the first time the nation’s holdings have been tied to a specific address with holdings much greater than analyst expectations.

Appold view: A bold disclosure from the government. In September 2021, BTC was around $52,000 with prices now around $72,000 during the week. That is a big treasury portfolio outperformance compared to many other nations and sovereign wealth funds.

🔷 BlackRock’s iShares Bitcoin Trust (IBIT) hit a new record of 99.3 million shares traded in “a single day, with a trading volume of over $3.9 billion. The ten new US-based Bitcoin ETFs have already achieved over $65 billion in volume in March alone, compared to February hitting $42 billion. 

Appold view: The ETF now has over $15bn in AUM and, outside of the former Grayscale Bitcoin Trust conversion to an ETF, is the largest. Institutional money appears to be reducing the market volatility and supporting a strong price. Early days yet but all indications are positive for increased adoption.

🔷 The UK Financial Conduct Authority (FCA) announced it would “not object” to requests from recognised investment exchanges to allow cryptoasset-backed Exchange Traded Notes (cETNs). However, the FCA will only allow professional investors such as authorised or regulated investment firms and credit institutions to trade cETNs, ruling out retail customers in the announcement.

Appold view: A small step forward but inadequate in the greater picture where Europe and the US allow access for all. The FCA made the poor decision in January 2021 to prevent UK retail from accessing these ETFs citing risk for retail. All it did was force investors onto less regulated and looser governed crypto venues (e.g. FTX).