GB Market Commentary 09/03/2022
by Marcus Sotiriou
Bitcoin rallied 9% to over $42,000 this morning, as key points from Joe Biden’s executive order on crypto have been leaked. The order seems relatively benign, hence giving the market some clarity. This is. the “first ever, whole-of-government” approach to overseeing the sector in the US. as it calls on the Treasury, Financial Stability Oversight Council, Federal Reserve and national security agencies to work on relevant sections of the crypto ecosystem.
As many investors had prepared for the downside risks of this event by waiting on the sidelines, we are seeing many buy Bitcoin back in what appears to be a spot-driven rally. Treasury secretary Janet Yellen’s comments were also revealed, as she said the order supports ‘responsible innovation’, which is a positive indication of what’s to come for regulation in the U.S.
The Canadian Bitcoin Spot ETF is representative of the institutional demand throughout this downtrend. According to Glassnode, the amount of Bitcoin held by the Purpose Bitcoin ETF has reached a new all-time-high. Since November the amount of Bitcoin held has risen by over 40%. Since 2022, despite the gradual decline in market conditions, the number of Bitcoins it holds has continued to grow from 30,000 to 35,000 approximately - an increase of about 5,000 Bitcoin (worth around $200 million). Over the past week alone, the ETF has added over 2,500 Bitcoin ($100 million). This extraordinary growth is indicative of the demand for a U.S. based Bitcoin spot ETF.
Institutions are finding other ways to gain exposure to crypto ETFs, as VanEck launched a crypto mining ETF today, which gives exposure to companies in the crypto asset mining industry. According to VanEck, it’s a “compelling time” to launch the fund due to being in the early stages of growth. Lopez, the Head of Product Management, said he expects high levels of demand from investors for all types of digital assets, but “without miners, blockchain transactions cannot be verified and audited, making their role absolutely essential”. VanEck has over $60 billion of assets under management, showing that big money is demanding exposure to the fastest-growing asset class in history.