Bitcoin Ascends as a New Gold, While Crypto Market Sees Both Growth and Setbacks
Summary:
Bitcoin is emerging as a safe haven asset, similar to gold, according to ARK Invest CEO Cathie Wood. ARK's Bitcoin ETF recently saw inflows of about $650 million in January. Bitcoin ETFs, however, are undergoing scrutiny by major trading platforms that could affect their broader adoption. The crypto market, despite the US launch of Bitcoin ETFs, has remained largely unmoved. In other news, BlackRock and Fidelity's Bitcoin ETFs recorded significant inflows in January, the bankrupt crypto lender Genesis Capital faces opposition to its bankruptcy plan from parent firm DCG, Vast Bank has exited the crypto space, and MicroStrategy added 850 BTC to its holdings in January.
Cathie Wood, the CEO of ARK Invest, believes Bitcoin (BTC) is emerging as a viable alternative to gold. In her February 4 interview, she expressed confidence that Bitcoin will soon share the status of a "refuge asset," a term defining investments often seen as reliable during unstable or disruptive economic periods. The Bitcoin exchange-traded fund (ETF), recently launched by ARK, recorded an inflow of approximately $650 million in January. This performance led some ETF analysts to place the fund in the "solid middle-class," signifying its strong potential for growth in a market presently ruled by finance giants, BlackRock and Fidelity. There are challenges to adoption, however. A Bloomberg report claims that Bitcoin ETFs are currently under review by major trading platforms, which will decide whether companies like LPL Financial Holdings - a leading independent broker in the U.S - will provide Bitcoin ETFs to over 19,000 independent financial advisors managing $1.4 trillion in assets. Despite the roll-out of Bitcoin ETFs in the U.S, the cryptocurrency market has seen little movement. Experts predict the status quo may hold up till the latter half of the year. It's early to claim the Bitcoin era has dawned, but the present circumstances might mark the end of a lingering crypto winter. This week's Crypto Biz chronicles Bitcoin ETFs' performance, Vast Bank's crypto exit, MicroStrategy's fresh BTC acquisition, and Genesis' purportedly generous bankruptcy scheme. January saw BlackRock and Fidelity’s Bitcoin ETFs achieve top 10 positions, amassing around $4.8 billion. With an estimated $2.6 billion in net flows, BlackRock’s iShares Bitcoin Trust secured the eighth spot, while Fidelity Wise Origin Bitcoin ETF snatched tenth place with $2.2 billion in net flows, according to Morningstar's Feb. 3 report. Grayscale Bitcoin Trust recorded the second-highest outflows among ETFs in January, with an estimated $5.7 billion leaving the fund for the month.
Digital Currency Group (DCG) has rallied against Genesis Capital’s bankruptcy plan. DCG, the parent company of the insolvent crypto lender, argues the plan excessively compensates creditors and contravenes the Bankruptcy Code. DCG highlighted in a Feb. 5 motion that Genesis' plan to pays customers more than their legal entitlement "disproportionately benefits a small controlling group of creditors at the expense of others," thereby violating the Bankruptcy code. Following a liquidity crisis in November 2022, Genesis filed for bankruptcy in January 2023, purportedly owing over $3.5 billion to its top 50 creditors.
Vast Bank, a pioneering U.S banking institution allowing clients to transact in cryptocurrencies through traditional checking accounts, recently discontinued its mobile cryptocurrency services available on Apple and Google. The bank assured its clients in an online FAQ that it would refund any leftover cryptocurrencies through liquidation. Vast Bank initially entered the crypto market in 2019 and had formed an alliance with Coinbase and SAP for its mobile crypto-friendly banking app in 2021. However, the bank received a directive from the Comptroller of the Currency in late 2023 claiming its "unsafe or unsound practices" in risk control and management, particularly its dealings with cryptocurrency.
MicroStrategy, the biggest public Bitcoin holder, recently added 850 BTC to its portfolio in January, bringing its total acquisition to 190,000 BTC worth $8.1 billion. During the Q4 2023 earnings call on Feb. 6, MicroStrategy CFO Andrew Kang announced it procured 56,650 BTC throughout 2023 at an average cost of $33,580. While the company reported a net income of $89.1 million, a stark contrast from its $249.7 million loss in 2022, its revenue saw a dip of 6.1% to $124.5 million during the same period. MicroStrategy officially became the first public company to invest in Bitcoin for capital allocation in December 2020. Stay tuned with Crypto Biz every Thursday to keep tabs on the business side of blockchain and cryptocurrencies.
Published At
2/10/2024 12:30:00 AM
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