What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
For roughly three weeks, the world’s largest asset manager has been seeking approval for the first spot-based Bitcoin ETF in the United States. Over the past few years, the SEC has rejected more than 30 similar applications. However, BlackRock is taking the matter seriously. In the first interview regarding the ETF application, CEO Larry Fink stated that Bitcoin has established itself as a serious asset. Similar to gold, the cryptocurrency can serve as a hedge against inflation and policy errors. Bitcoin is the digital version of gold and an important step in the tokenization of traditional assets. Furthermore, an exchange-traded fund (ETF) based on the spot markets would provide broader access to the asset for a wider range of investors. With a stronger conviction and an almost impeccable track record in ETF approvals (575:1), the chances look promising.
Gemini, founded by the Winklevoss twins in 2015, is the fourth-largest cryptocurrency exchange in the United States after global leaders Coinbase, Kraken, and Binance. In addition to trading services, Gemini has been offering interest rates of up to 8% on customer deposits through its “Earn” program since 2021. Behind the scenes, the crypto lender Genesis Global managed the funds. However, since Genesis faced a liquidity crisis in November 2022, more than 232,000 Earn customers have been waiting for $1.2 billion in deposits. Now, Gemini is resorting to legal measures, claiming that its parent company, Digital Currency Group, intentionally deceived Genesis customers and concealed an impending insolvency.
Bitcoin utilizes the proof-of-work mechanism as its consensus mechanism. This approach provides a secure and decentralized method of validating transactions and preventing double-spending, without relying on a central authority. Proof-of-work can be understood as a cryptographic puzzle-solving process in which miners compete to find a solution. It requires substantial computational power, adding an extra layer of security to the network, as attacking or manipulating the blockchain becomes costly. However, due to the required computational power, this process also entails significant energy consumption. An overview of all relevant data and facts concerning energy consumption, carbon emissions, and the sustainability of Bitcoin mining can be found.
Benefitting from the tailwind of BlackRock’s ETF application, the crypto markets experienced a significant recovery for the second consecutive quarter. This occurred despite further turbulence, including the regulatory shutdown of crypto custodian Prime Trust, multiple lawsuits against leading global cryptocurrency exchange Binance, and the ongoing crypto-hostile strategy of the SEC. Additionally, this reversal of fortunes took place independently of traditional markets, as Bitcoin’s correlation with the US dollar, bonds, and stocks approached single-digit percentages, confirming sector-specific optimism.
A summarizing review of what has been happening at the crypto markets of the past week. A look at trending sectors, liquidity, volatility, spreads and more. The weekly report in cooperation with market data provider Kaiko.
In addition: Switzerland has had a fully FINMA-regulated financial market infrastructure for digital securities – the SIX Digital Exchange (SDX) – for almost two years. Through a partnership with Zug-based venture capitalist CV VC, this platform aims to become accessible to startups from the Crypto Valley. The collaborative ecosystem should connect startups with partner financial institutions and offer optimized financing solutions, enhanced automation, and complete transparency. Moreover, blockchain startups, as issuers, can enhance their appeal to institutional investors by utilizing traceable tokenized assets.