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Weekly Update: 8th of May

Hodl Team
Hodl Team
8 May 2024
Welcome to our weekly update, where we provide insights into the latest developments in the digital assets market.

What happened between the 1st and 8th of May?

  • The Securities and Exchange Commission (SEC) delays its decision regarding Invesco Galaxy’s Ether spot ETF to July. Read more

  • The recently launched Hong Kong Bitcoin and Ether ETFs experienced weak traction in their first trading days. Read more

  • The increasingly popular Real-World Assets (RWA) protocols approached $8B in total value-locked, bolstering its potential. Read more

  • After seven consecutive trading days of net outflows, the Bitcoin ETF market turns green, notably, Grayscale experiences positive net flow for the first time since inception. Read more

The SEC delays its decision on Ether ETFs once again

In a May 6 filing, the SEC gave itself 60 more days to provide a decisive answer to Invesco Galaxy’s spot Ether ETF, pushing the deadline to the 5th of July. Over the past months, the SEC has delayed its decision on this financial instrument from various asset managers such as BlackRock, Fidelity, and Ark 21Shares. For now, the most important date remains the 23rd of May as this is the date that the SEC must provide an answer regarding VanEck’s application. This date will provide better insight into the SEC's thought process and how the applicants should improve their applications, as market participants see a small chance of approval in May.

Hong Kong Bitcoin and Ether ETFs experience weak adoption

On the 30th of April, the industry witnessed the first Bitcoin and Ether spot ETFs being introduced in Asia as Hong Kong opened its doors. Although expectations weren’t exceedingly high, for now, the ETFs have underperformed. Before launching, the three Bitcoin and three Ether ETFs raised ~$293M in pre-seeding, but since their launch, the funds only experienced ~$24M net inflow. Currently, mainland Chinese are not allowed to invest in these vehicles, and the question remains if in the future this will become possible.

The RWA narrative becomes increasingly stronger as the TVL grows

Crypto research firm Messari reported that RWA projects increased their TVL by 60% between February and April. According to experts, this surge is mostly due to the interest in high-yield investments related to lending, which these platforms offer. The TVL consists of various investments such as securities, commodities, real estate tokenization protocols, bond-backed stablecoins, and other assets. Earlier this year, the sector experienced strong hype as BlackRock launched its first tokenized investment fund, and there are signs that the sector can become an increasingly stronger and more important narrative in 2024.

Bitcoin ETF market experienced net inflows after a red period

After a period of net outflows lasting from the 24th of April until the 2nd of May, the Bitcoin ETF market turned positive. Notably, for the first time since its launch, Grayscale’s ETF (GBTC) experienced a net inflow of approximately $63M on the 3rd of May, contributing to the overall inflow of $378.3 million on that day. On the 4th of May, the ETFs experienced a net inflow of around $217M, with GBTC seeing a $3.9M inflow. So, although it isn’t a significant inflow, the tides may be turning for GBTC, which could have a positive impact on the overall market, as the ETF was the main contributor to outflows.

In other digital assets news

  • Bitcoin surpassed the milestone of one billion transactions, processing an average of 178,475 transactions since January 3rd, 2009.

  • Hermetica, a DeFi protocol, has announced the launch of the first Bitcoin-backed, yield-bearing synthetic dollar, offering a yield of up to 25%. The synthetic dollar is expected to launch in June and will be native to Bitcoin and its Layer 2’s.

 

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