Bitcoin ETFs: What are they and how do they work?
Justin Arzadon
6 minutes reading time
- Digital assets
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Bitcoin, along with the broader crypto market, ended lower over the last week. Dragging crypto prices down towards the end of the week was a Wall Street Journal (WSJ) report that the DOJ is probing stablecoin issuer Tether for violations of sanctions and anti-money laundering rules.
Bitcoin and Ethereum were down 1.72% and 6.32% respectively over the seven days to 27 October. Bitcoin’s market capitalisation is at US$1.32 trillion. The global crypto market cap is down to approximately US$2.28 trillion, while bitcoin’s market dominance is now a whopping 58.1%.
| Price | High | Low | Change from previous week | |
| BTC (in US$) | $67,052 | $69,362 | $65,198 | -1.72% |
| ETH (in US$) | $2,476 | $2,759 | $2,387 | -6.32% |
Source: CoinMarketCap. As at 27 October 2024. 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
Tether denies allegations
Tether CEO Paolo Ardino has denied that an investigation is underway, after it was reported on Friday by the WSJ that a US probe has been started into potential non-compliance with AML laws.
Tether’s dollar-pegged stablecoin currently has a market cap of over $120 billion and plays an integral role in the cryptocurrency ecosystem as the settlement currency for crypto trading, and a hedge against volatility for many countries.
Ardino posted on X: “As we told WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise.”1
Microsoft set to vote on Bitcoin
The National Centre for Public Policy Research is encouraging Microsoft shareholders to consider Bitcoin for its balance sheet. The conservative think tank advocates for Bitcoin, and believes it is an “excellent, if not the best, hedge against inflation”. The proposal is titled “Assessment of Investing in Bitcoin”.
The agenda item was made public in a filing with the US SEC by Microsoft on 24 October for the upcoming annual shareholder meeting on 10 December. The Microsoft board of directors is recommending that shareholders vote against the proposal, stating that the company already “carefully considers this topic,” and “Past evaluations have included Bitcoin and other cryptocurrencies among the options considered, and Microsoft continues to monitor trends and development related to cryptocurrencies to inform future decision making”.2
CRYP company spotlight
TeraWulf howls with impressive stock gains
Bitcoin miner TeraWulf has outperformed bitcoin YTD. The company is up 177% VS BTC’s 51.8% to 25 October, making it one of the best-performing bitcoin miners for the year. Not only has it had significant price performance, but it is also heavily backed by institutions3.
TeraWulf Inc. is currently held in Betashares Crypto Innovators ETF (ASX: CRYP)4. According to its website, ‘TeraWulf is an energy infrastructure company specializing in developing and operating fully integrated, sustainable facilities supporting Bitcoin mining and AI/HPC applications5.’
Bitcoin (BTC): Realised Cap [USD]
Realised Cap values different parts of the bitcoin supply at different prices (instead of using the current daily close). Specifically, it is computed by valuing each unspent output transaction (UTXO) by the price when it last moved.
According to data from Glassnode, the realised cap has ticked up to a new ATH, reaching over $646 billion. This suggests that liquidity across the asset class is rising, and meaningful capital inflows support the price increase.
Source: Glasssnode. Past performance is not indicative of future performance.
Bitcoin (BTC): Number of Entities With Balance ≥ 1k
This metric shows the number of unique entities holding at least 1k coins. Entities are defined as a cluster of addresses that are controlled by the same network entity and are estimated through advanced heuristics and Glassnode’s proprietary clustering algorithms.
According to data from Glassnode, the number of whale wallets has increased significantly since the beginning of the year and now sits at a level not seen since 2021. Historically, this trend by whales has led to bullish outcomes for bitcoin, as it may indicate that large players are accumulating in anticipation of potential upwards movement in the underlying price.
Altcoin news
In altcoin news, most of the Top 20 moved lower, except for Solana (SOL), which was higher by 8.3% over the 7 days to 27 October, and is higher by 437% in the last year. According to recent data, helping push prices higher are the Total Value Locked (TVL) on the network, which has continued to increase, and fees on the network reaching their second-highest level in history due to memecoin activity6.
Solana is a Layer 1 blockchain and is a smart contract platform. Launched in 2020, it is a direct competitor to Ethereum. According to the protocol’s website, ‘Solana is engineered for widespread, mainstream use by being energy-efficient, lightning fast, and extremely inexpensive7.’
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://fortune.com/crypto/2024/10/25/tether-department-justice-probe-money-laundering-sanctions-binance-crypto/
2. https://www.coindesk.com/business/2024/10/24/microsoft-urges-shareholders-to-vote-against-a-proposal-to-assess-bitcoin-as-a-diversification-investment-filing/
3. https://news.bitcoin.com/terawulf-overview-of-a-rising-bitcoin-miner-in-2024/
4. As at 27 October 2024. No assurance is given that this company will remain in the portfolio or will be a profitable investment.
5. https://www.terawulf.com/about-us/
6. https://ambcrypto.com/solana-hits-record-highs-in-2-key-areas-how-memecoins-helped-sols-rise/
7. https://solana.com/learn/blockchain-basics
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.
