Welcome to the 51st edition of ‘The Digital Asset Digest’. Today, we look at how ETFs can help with Bitcoin’s adoption and talk about the future of NFTs.
“Global blockchain research and Cardano development company IOHK has announced a partnership with the Ethiopian Government, as per a release shared with CryptoSlate.”
Source: Crypto Potato
“New investors joining the crypto market with absurd expectations of making massive gains within a short time could be the reason for the latest crypto price volatility. ”
“Decentralized finance has many of the hallmarks of previous cryptocurrency bull markets: incredible gains, extreme volatility and massive risks. In a new report, leading noncustodial cryptocurrency exchange ShapeShift explains the four biggest risks facing DeFi investors and why the emerging field of decentralized insurance could offer a solution.“
“NFT mania has just gone bigger, with Binance, one of the world’s largest cryptocurrency companies, announcing its intention to launch a marketplace for the new species of digital assets.”
Source: The Block
“The General Services Administration (GSA) closed its third-ever bitcoin auction yesterday, selling 9.45 BTC and bringing in a total of $487,000.”
INDUSTRY WIDE SNAPSHOT
Bitcoin ETFs Are A Bridge to Mainstream Adoption
For much of its history, Bitcoin could only be bought and sold via crypto exchanges or peer-to-peer platforms. As such, the adoption of this revolutionary technology involved considerable research, a healthy dose of tech-savvy and tiny leap of faith. Now, a traditional financial instrument is about to make adoption a lot easier and much more convenient.
Here’s how the rise of Bitcoin ETFs (exchange-traded funds) changes the crypto landscape forever.
The popularity of ETFs
ETFs are designed to be convenient. An ETF is a type of security that tracks an index, sector, commodity, or other assets, and can be easily bought or sold on a traditional stock exchange. In other words, these instruments trade like stocks but represent ownership in various forms of assets beyond companies.
Investors across the world seem to love the simplicity and effectiveness of ETFs. They have collectively deployed over $4 trillion in recent years. With over $361 billion in assets, the SPDR S&P 500 ETF (SPY) is the most popular ETF in the world. It tracks the performance of the S&P 500 index.
However, the industry is moving beyond indexes. There’s now an ETF for nearly everything – from robotics to genomics – which makes it easy for investors to add exposure to emerging themes and new industries without digging into specific companies. That’s why Bitcoin ETFs could be so potent.
Advantages of Bitcoin ETFs
An ETF that tracks the market value of Bitcoin could make digital assets more accessible to a broader pool of users. For ordinary retail investors, buying and selling a Bitcoin ETF could be arguably easier than creating a new profile on a crypto exchange, creating a cold wallet, or managing seed phrases.
As of May 2021, Canada has already approved four separate Bitcoin ETFs, all of which trade on the Toronto Stock Exchange. These ETFs collectively attracted over $1 billion within just a few weeks of launch. Similar ETFs are being considered in the U.S.
The Securities and Exchange Commission (SEC) formally acknowledged a bitcoin ETF proposal from VanEck last month. The Commission is also considering similar applications from several other financial institutions. Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research, told CNBC that the agency was likely to approve at least one Bitcoin ETF “in the coming year or two.”
The growing popularity of Bitcoin ETFs is a clear sign that digital assets are becoming more mainstream. As more countries launch similar vehicles, millions of investors could be introduced to Bitcoin’s technology and promise for the first time. A growing base of retail investors should make the ecosystem more robust. It may also help regulators and institutions fully embrace the technology in the near future.
Bitcoin ETFs could introduce digital assets to a new pool of investors. As these vehicles get approved and listed, the Bitcoin network could see wider adoption and much more liquidity in the years ahead. It’s an important step towards making cryptocurrencies mainstream.
Is the NFT Boom Over?
Non-fungible tokens or NFTs dominated the headlines just a month ago. Online content creators, speculators, and digital artists rushed in to cash out millions from their pieces of intellectual property. Indeed, sales of digital art broke new records, propelled by the NFT boom. But now, prices are down and mainstream attention seems to have evaporated.
Is this the end of the road for the NFT sector or just the beginning?
The average price of NFTs plummeted almost 70% from a peak of around $4,000 in mid-February to around $1,400 in early April, according to market research site NonFungible.com. Meanwhile, Google search traffic for the term “NFT” has declined 49% from an all-time high in early March.
Considering the price correction in Bitcoin and Ethereum this past week, the value of the NFT sector may have dipped even further by now. This swift destruction of value may discourage some retail investors and new adopters. However, industry veterans seem to be doubling down on this cutting-edge technology.
Industry experts recognize and embrace the volatility of digital assets. Bitcoin has suffered several drawdowns over its 12-year history and bounced back stronger every time. Several key figures in the crypto community believe NFTs could experience similar rebounds.
Marc Cuban, for instance, has made multiple investments in the sector in recent months. The billionaire is reportedly building a “digital art gallery for NFTs.” He’s also an investor in CryptoSlam, an aggregator of non-fungible tokens (NFTs) collectibles data. As part of the NBA’s blockchain advisory board, Cuban could be instrumental in helping NFTs become mainstream.
Cuban isn’t the only venture capitalist betting on this sector. Industry giant Andressen Horowitz (a16z) led OpenSea’s $23 million Series A earlier this year. “Just like Zillow takes raw real estate data and makes it usable in a trusted and reliable way at your fingertips,” general partner Katie Haun said in a blog post, “OpenSea makes NFTs searchable, usable, and organized.”
Developers and corporations haven’t given up on the technology either. The Ethereum Foundation is working on the Ethereum Name Services project that could integrate NFTs with a decentralized and open-source naming system built on the blockchain. The UFC is about to roll out digital trading cards as NFTs while MotoGP has already sold 28,500 NFT cards over the past few weeks.
As developers and investors remain committed to the ecosystem, NFTs could see new applications and innovations in the years ahead.
Discuss declining value and interest in NFT and how this isn’t the end. Instead, several projects and startups are working on making this market mature and even BTC went through boom-bust cycles.
Source: Forbes “
There’s a weird little conundrum amid the exuberance around decentralised finance: have you ever thought about quite how much the ecosystem depends on centralised services?! There’s a reason for that and it points the way to the big opportunities for existing institutions.”
The price of Bitcoin has been decreasing from the 14th of April when it reached $64,735 at its highest point. From there we have seen a decline of 27.56% measured to its lowest point made on the 25th which was at $46,896. A recovery of 15.7% followed as the price came up to $54,400 area on its highest point of the week so far. Currently, its is being traded slightly lower but is still in an upward trajectory.
Source: Trading View
On the hourly chart, you can see that the price made a three-wave decrease from the 14th of April which was most likely an WXY correction of the higher degree count. It ended with a double bottom with an impulsive rise that followed.
This could be an early indication that the price decrease ended and that we are seeing the development of the next starting impulse. However, we could have seen another corrective ABC to the upside from the 23rd which would be the corrective WXY continuation wave leading into a lower low.
We are now seeing the price looking for support above the significant horizontal support at $53,369 with a minor triangle forming, so from its breakout direction, we are to see which scenario gets validated. If we see a breakout to the upside it could mean that the starting impulse is on the move, but if the price starts to impulsively move to the downside it could be an indication that the corrective ABC to the upside ended.
You can look forward to our lending report at the end of this week, but in the meantime, our friends at Blockhack are running a hackathon in the first week of May that you should definitely check out!