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BlackRock Dives into Tokenized Assets with $100M USDC Fund in Partnership with Securitize
BlackRock, the world's largest asset manager, has ventured into the tokenized asset space with the establishment of the BlackRock USD Institutional Digital Liquidity Fund, a partnership with asset tokenization firm Securitize, as revealed in a March 19 SEC filing. Although specific details about the asset classes targeted for tokenization were not disclosed, the fund has initiated with $100 million USDC on the Ethereum blockchain. This move underscores BlackRock's engagement in the burgeoning field of real-world asset tokenization, aiming to enhance traditional financial transactions' efficiency through blockchain technology. The announcement has notably affected the value of ONDO, the native token of Ondo Finance, a platform that supports the tokenization process, suggesting positive market reception amidst broader market downturns. This initiative marks another significant stride for BlackRock in the digital assets realm, complementing its successful spot Bitcoin ETF, IBIT, and pending Ethereum ETF application, aligning with CEO Larry Fink's vision of digital assets' integration into mainstream finance.
Goldman Sachs, through the insights shared by Mathew McDermott, its global head of digital assets, at the Digital Asset Summit in London, has been exploring investment opportunities in the crypto bankruptcy claims market amidst the fallout of several large crypto companies, including FTX, Genesis, Celsius, BlockFi, and Voyager. While McDermott didn't confirm specific purchases of bankruptcy claims, he highlighted the bank's active investment in the digital asset space since launching its crypto desk in 2021. Despite the challenges faced last year, 2024 has seen a significant shift in market dynamics, with increased institutional participation supplementing the traditionally retail-driven price action. McDermott emphasized the remarkable evolution of the crypto business within Goldman Sachs, particularly pointing out the burgeoning opportunities in tokenization and the development of the bank's digital asset platform. This strategic focus is expected to yield significant results as the financial market's interest shifts from proof of concept to executing real transactions in the digital assets domain.
Luxor and Bitnomial Introduce U.S.'s First Exchange-Traded Hashrate Futures for Bitcoin Miners
Luxor Technology has partnered with Bitnomial to launch the United States' first exchange-traded hashrate futures, providing a novel tool for Bitcoin miners to hedge against revenue volatility, especially with the upcoming halving event in April 2024 that will reduce mining rewards by half. This cash-settled product, unique for being traded on an exchange rather than over-the-counter, offers enhanced liquidity, transparency, and lower counterparty risk. The futures are based on Luxor's hashprice concept, measuring mining revenue per unit of hashrate, a crucial factor as increased competition from additional mining resources pressures miners' potential earnings. Approved by the CFTC, these futures aim to stabilize miners' revenue by enabling more strategic risk management, thereby improving their appeal to investors and reducing the cost of capital amid a backdrop of recent bankruptcies and a shift in investor preference towards Bitcoin ETFs over mining stocks.
Trading Desk Insights
Bitcoin experienced a significant downturn, plunging to $60,800, which resulted in approximately a $300 billion reduction in market capitalization from its recent peaks. This 8% drop on Tuesday marks one of the steepest single-day declines since the FTX fiasco in November 2022. The downturn can be attributed to a confluence of factors, predominantly macroeconomic indicators such as unexpectedly high inflation figures, an over-leveraged market, and diminishing prospects for the approval of an ETH spot ETF.
In the realm of ETFs, we're observing a notable shift with net outflows reaching $326.2 million, marking the highest since their inception and signifying the first occurrence of back-to-back net outflows since January 25th. Additionally, Grayscale's outflows persisted, totaling $443.5 million.
This turbulence presents several intriguing technical opportunities for a potential rebound, especially in light of the Federal Reserve's press conference today.
In a surprising turn of events, Solana's 24-hour DEX volume has eclipsed Ethereum's, recording $3.58 billion compared to Ethereum's $3.05 billion. This surge is largely fueled by the meme coin craze, benefiting from Solana's lower transaction fees. Solana's impressive DEX volume-to-TV ratio underscores its superior capital efficiency against other blockchains, including Ethereum. Notably, Solana has outpaced Ethereum by 55% in the week leading up to March 13th.
Turning our gaze to the equities market, S&P 500 futures remained steady on Wednesday, following a positive performance across major indexes, as the market anticipates the Federal Reserve's forthcoming policy announcement.
The Federal Reserve's agenda is packed, yet it's anticipated that the meeting might not significantly alter the monetary policy outlook. The consensus is against a rate cut at this meeting, with the focus shifting to the Fed's economic forecasts, including the "dot plot" showing individual members' interest rate projections. The last update in December hinted at a series of rate cuts through to 2026, aiming to reach a "neutral" federal funds rate of 2.5%.
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Disclaimer
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.
Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.
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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