Bitcoin ETFs: What are they and how do they work?
Justin Arzadon
5 minutes reading time
- Digital assets
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The broader crypto market cooled off along with bitcoin, snapping an eight-week streak of gains, the longest since 2017. Bitcoin was trading at US$41,962, with ethereum underperforming, down -5.88% vs bitcoin’s -4.44% decrease. Bitcoin’s market capitalisation fell to US$821.3 billion, with the total crypto market cap down to US$1.58 trillion. Bitcoin’s market dominance is 51.7%.
| Price | High | Low | Change from previous week | |
| BTC (in US$) | $41,962 | $43,994 | $40,594 | -4.44% |
| ETH (in US$) | $2,212 | $2,376 | $2,153 | -5.88% |
Source: CoinMarketCap. As at 17 December 2023. Past performance is not indicative of future performance. Performance is shown in US dollars and does not take into account any USD/AUD currency movements.
Source: Glassnode. Past performance is not indicative of future performance.
Crypto news we’re watching
BlackRock revises bitcoin ETF filing
A revision to the BlackRock spot bitcoin ETF filing will allow US banks to participate as authorised participants (APs) for the funds by allowing them to create new fund shares with cash, rather than just bitcoin. APs are financial institutions, often banks, that dynamically manage the creation and redemption of ETF shares (units) in the primary market.
The new model addresses the SEC’s concerns with the in-kind redemption model. The new mechanism allows large US-regulated banks that are not allowed to hold bitcoin directly to bypass the restrictions. APs will be able to exchange cash for bitcoin through an intermediary, to be held by the ETF custody provider, which in BlackRock’s case is Coinbase Custody.1
El Salvador’s Freedom Visa
El Salvador, looking to attract at least 1,000 high-net-worth individuals to the country, has announced its Freedom Visa. For a $1 million allocation to the El Salvador government, the country will grant residency benefits. If approved, the applicant will receive Salvadorian citizenship and a passport for the donor and family members. The nation was the first country to make bitcoin legal tender back in 2021 and this strategy is part of the President’s bitcoin strategy. The Freedom Visa will be approved for only 1,000 applicants per year. Fees can be paid in either BTC or the stablecoin USDT.
The program’s official website states: “Experience Freedom, Security, and a Bitcoin lifestyle by adopting El Salvador as your home. El Salvador has been reborn as the land of economic liberty. But this is just the beginning. Come help us build the future you want to see.”2
Hive Digital announces foray into artificial intelligence
Bitcoin miner and high performance computing firm, Hive Digital, is looking to diversify into AI. The company has acquired 96 Nvidia GPUs to boost its high performance computing operations. Clients will be able to access the GPUs for various timeframes.
Hive’s executive chairman commented: “With our proven track record of operating massive fleets of GPUs, Hive is in an excellent position to be a leader in the AI infrastructure revolution. Put simply, we have been building Hive’s GPU and AI business unit to be the ultimate AI infrastructure pick and shovel play.”3
Hive Digital is a Vancouver-based company specialising in digital asset mining and High-Performance Computing. Hive is currently held in Betashares Crypto Innovators ETF (ASX: CRYP).
On-chain metrics
Bitcoin (BTC): Mining Difficulty (denoted in raw hashes)
This metric shows the current estimated number of hashes required to mine a block. Note: bitcoin mining difficulty is often denoted as the relative difficulty with respect to the genesis block, which required approximately 2^32 hashes.
According to data from Glassnode, mining difficulty continues to climb, and has set a new all-time high.
Source: Glassnode. Past performance is not indicative of future performance.
This metric shows the total miner revenue, i.e. fees plus newly minted coins.
According to data from Glassnode, revenue has recently spiked creating a 3-year high.
Source: Glassnode. Past performance is not indicative of future performance.
Altcoin news
The top-performing top 20 altcoin over the seven days to 17 December was Internet Computer (ICN), returning just over 87%, and 178% over the last 365 days. Helping push the price higher was news that Ledger Live, an app that allows you to facilitate interactions with the blockchain and manage digital assets, has added support for the blockchain.
According to the Internet Computer website, the blockchain is a limitless smart contract cloud that hosts everything on-chain: data, content, computations and user experiences. Internet Computer adds autonomous serverless cloud functionality to the public internet.
Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.
Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment. Any investment in crypto assets or crypto-focused companies should only be considered as a very small component of an investor’s overall portfolio.
References:
1. https://unchainedcrypto.com/blackrock-updates-bitcoin-etf-filing-to-make-access-easier-for-wall-street-banks/
2. https://www.forbes.com/sites/digital-assets/2023/12/11/el-salvador-invites-bitcoin-millionaires-to-rebuild-the-country/?sh=29d02f442abd
3. https://news.bitcoin.com/bitcoin-miner-hive-diversifies-into-ai-acquires-96-nvidia-gpus-to-boost-high-performance-computing-operations/
4. https://www.cryptopolitan.com/icp-price-prediction/
Past performance is not indicative of future performance.
Off the Chain is published every second Tuesday. It provides the latest news on bitcoin and the rest of the crypto market, along with analysis and insights into the world of crypto.
It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.
2 comments on this
Hi Justin
I am tapping your brain cell s for some information …………….
Maybe you can help me OR not
2 weeks ago I tried to transfer monie s to my Independent Reserve account
My bank refused the transaction, Blocked my accounts , though I have an account with Independent Reserve
I ended going through the fraud dept of CBA ………5 million question s , jokingly , why I was doing that .
Can you enlighten me on any more informationn , that people need to know
cheers Paul