Hardly any news, hardly any price movements - for once, things are quiet in the crypto sector. Bitcoin, Ethereum & Co have been moving sideways for many weeks. Crypto ETNs are being sold, but on a low flame.
28 September 2023. FRANKFURT (Börse Frankfurt). Disillusionment on the crypto market: After soaring until July, cryptocurrencies are now weakening again or moving sideways. "For the crypto market, September initially brought uncertainties that can be traced back to regulatory and macroeconomic causes," reports Adrian Fritz from the issuer 21Shares. These include the announcement by the US Federal Reserve that it will continue to raise key interest rates in the coming months and will not make any cuts until at least June 2024. This also includes the question of the approval of a bitcoin spot ETF in the USA.
Numerous asset managers, including very large ones such as BlackRock, had submitted applications to the US Securities and Exchange Commission (SEC) for approval of a bitcoin spot ETF, most recently also Franklin Templeton. However, the SEC postponed the decision on the approval of several ETFs applied for this week, partly until 2024. So far, the SEC had rejected similar applications; moreover, the regulators are known for their scepticism towards the crypto industry. Should the product be approved after all, however, this could - according to many - drive the price up sharply. Reference is made to the gold price development after the launch of the first gold ETF in the USA in 2004. In fact, the gold price more than quadrupled between 2004 and 2011.
The bitcoin price is at 25,129 US dollars on Thursday morning, roughly the same level as the previous month. In mid-July, however, it was still just under 32,000 US dollars. The all-time high from 2021 at almost 69,000 US dollars is far away anyway. Bitcoin rival Ethereum currently costs 1,614 US dollars; at its high this year it was over 2,100 US dollars.
SEC postpones spot ETF decision
Another topic is the trial of Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, which begins next Monday. Bankman-Fried is indicted on 13 counts, with US authorities accusing him of fraud and money laundering, among other charges. The trial will no longer bring major burdens for cryptocurrencies, says Jan Altmann of issuer ETC Group. "This should already be priced into the prices," he explains, referring to the price losses last autumn and the subsequent "crypto winter". "However, the topic will probably be discussed again in many media."
Altmann
Bitcoin BSC: betting on price explosion
Meanwhile, a certain hype has arisen around the so-called Bitcoin BSC. "Several million US dollars are said to have already been collected in the pre-sale," Altmann notes. This new crypto project is based on the classic Bitcoin and the Binance Smart Chain. "The staking concept seems to be catching on with many an investor". This would reward those owners who held their tokens, the Bitcoin BSC would be locked in the wallet for this purpose. "As a result, free trading and thus the supply of this product is likely to decrease. Ultimately, the hope here is for higher prices." But there is also criticism, for example regarding decentralisation, he said. "Moreover, this cryptocurrency wants to profit from the glamour of bitcoin, but has nothing to do with it."
Outflows, especially from bitcoin trackers
Crypto ETNs have been sold the past few weeks, issuers report. According to ETC Group, the outflow lists mainly include bitcoin ETNs, but also ethereum ETNs. The picture is somewhat more balanced for trackers of crypto baskets. Smaller currencies hardly play a role. "Bitcoin trackers still saw outflows and were again the focus of the month," Fritz of 21Shares also notes. Altcoins were the only category with inflows, he said. Benjamin Dean of issuer WisdomTree reports quiet trading in crypto ETNs in September: "Volume on digital asset exchanges remains low at around $40 billion per month."
Fritz
Traders from ICF Bank and Lang & Schwarz also see it this way: Ivo Orlemann, who trades crypto ETNs for ICF, among others, reports low turnover. If there is trading, it is almost exclusively in Bitcoin and Ethereum ETNs. "There is almost nothing going on in the smaller currencies." According to Leo Puschmann of Lang & Schwarz, trading in crypto ETNs is also currently subdued. Buying and selling are in balance, he said. "We don't see any conspicuous features." There was a lot of turnover at times in ETC Group Physical Bitcoin (DE000A27Z304), 21Shares Ripple (CH0454664043) and VanEck Crypto Leaders (DE000A3GWEU3).
What is being traded
The most traded crypto ETN on Xetra in August was again ETC Group Physical Bitcoin, followed by VanEck Bitcoin (DE000A28M8D0), CoinShares Physical Bitcoin (GB00BLD4ZL17) and 21Shares Bitcoin (CH0454664001). The highest-turnover ETNs on other cryptocurrencies were 21Shares Solana Staking (CH1114873776) and VanEck Ethereum (DE000A3GPSP7). All crypto ETNs tradable on Xetra are physically collateralised and listed on the Regulated Market of the Frankfurt Stock Exchange. They are also centrally cleared by Eurex Clearing AG as the central counterparty (CCP) of Deutsche Börse Group.
by: Anna-Maria Borse, 28 September 2023 © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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