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Ethereum ETFs Could Be Approved Today: What You Need to Know
In a surprising turn of events, Ethereum ETFs now have a high chance of being approved imminently, potentially as soon as today. Unlike the Bitcoin ETF approvals, the SEC's last-minute engagement with issuers suggests possible political intervention. This sudden change follows a lack of prior engagement, with the SEC only starting to review Ethereum ETF applications on May 20. Prospective issuers have since updated their 19b-4 forms, and approval of these forms, along with the S-1 registration statements, is needed for the ETFs to start trading. Today marks the final decision day for the VanEck Ethereum ETF. If approved, trading could still take weeks due to the additional processing of the S-1 forms.
House Approves Bipartisan Bill on Crypto Market Structure
The US House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21 Act) with a 279-136 vote, marking the second crypto-focused legislation to advance in Congress this month. Seventy-one Democrats supported the bill. Among three proposed amendments, those by Reps. Brittany Pettersen and Ralph Norman advanced, expanding oversight and including digital asset entities under the Bank Secrecy Act. Rep. Greg Casar’s amendment to lower the crowdfunding limit for crypto entities was rejected. The FIT21 Act now heads to the Senate, despite opposition from the White House, which argues it lacks sufficient consumer protections.
Asia’s MicroStrategy’ Metaplanet Outperforms All Other Japanese Stocks
Metaplanet, a Japanese investment firm adopting a Bitcoin strategy similar to MicroStrategy's, has seen its shares surge 158% over the past week, making it the top performer among Japanese stocks. Trading was halted twice under Tokyo Stock Exchange rules as the share price rose 127% in two days, nearing a $1 billion market cap. Since announcing its Bitcoin investment strategy in April, Metaplanet has accumulated 117.7 Bitcoin, driving a 389% rise in its stock. The firm cites Japan's high debt levels, negative interest rates, and a depreciating yen as reasons for its Bitcoin strategy. Despite its success, Metaplanet shares remain inaccessible to U.S. investors, though plans to tokenize shares on a Bitcoin layer-2 network may change that.
Grayscale Introduces Trusts for Bitcoin Layer-2 Stacks and Near Protocol
Grayscale has introduced two new investment trusts focused on Bitcoin layer-2 Stacks and Near Protocol, exclusively available to accredited investors. These trusts, part of Grayscale's broader range of cryptocurrency offerings, reflect the growing demand for diverse crypto exposure. Stacks, as a Bitcoin layer-2 network, enables smart contracts and decentralized finance on Bitcoin's infrastructure, while Near Protocol emphasizes high-speed blockchain and AI development. Grayscale sees private placements as a starting point with eventual ETF listing as a goal, building on the success of its Bitcoin Trust.
Trading Desk Insights
Bitcoin has pulled back by over 3% towards an intraday support level of 67,700, as anticipated. Should the support around 67,000 fail to hold, we could see a decline towards 65,000, which aligns with the 50-day moving average. Meanwhile, ETH has outperformed BTC by 5% over the past 24 hours.
In the US BTC ETF market, holdings have reached a new record of over 850,000 BTC in custody, surpassing the previous high of 845,000 BTC from early April. Yesterday alone, the market saw another influx totaling $154 million.
The potential approval of an Ether spot ETF would be groundbreaking, as it would mark the first non-bitcoin digital asset to be classified as a commodity. This raises the possibility that Solana could follow a similar path. While the ETH spot ETF 19b-4 filings are likely to receive approval this week, the S-1 filings are not expected to be effective for several weeks to months, indicating no ETH spot vehicles until this summer.
Pepe (PEPE) surged to a $6 billion market cap on Thursday, becoming the biggest meme coin launch of 2023, driven in part by its use as a leveraged bet on the growth of the Ethereum ecosystem.
The crypto industry achieved its most significant U.S. policy victory on Wednesday when the House of Representatives passed a comprehensive bill to regulate digital asset markets with a 279-136 vote, gaining bipartisan support. The Financial Innovation and Technology for the 21st Century Act (FIT21) marks the first major crypto bill to clear one of Congress's chambers. The bill now heads to the U.S. Senate, where its future remains uncertain due to the lack of a counterpart bill.
U.S. stock futures rose on Thursday as Wall Street digested the latest quarterly results from market leader Nvidia. Nvidia shares soared 6% in extended trading, surpassing $1,000 for the first time, reflecting strong AI demand as its revenue more than tripled in the fiscal first quarter, with its data center business growing by over 400% year-over-year. Nvidia CEO Jensen Huang mentioned that OpenAI, Google, Anthropic, and around 20,000 generative AI startups are vying for every GPU available from cloud providers.
In other news, JPMorgan Chase's Chairman and CEO Jamie Dimon cautioned that a "hard landing" for the U.S. economy cannot be ruled out. He told CNBC that the worst outcome could be a "stagflation" scenario, characterized by rising inflation and slowing growth amid high unemployment. Dimon also noted that interest rates might still increase "a little bit."
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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.
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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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