BITCOIN CROSSES 71K

June 05, 2024

Bitcoin Crosses $71K as BTC ETFs See $880M Inflows in Best Day Since March

On Tuesday, U.S.-listed spot bitcoin ETFs experienced their best day of inflows since March, with over $880 million pouring in, primarily led by Fidelity's FBTC. This marked the second-highest overall inflow day since the introduction of 11 bitcoin ETFs in January. Bitcoin prices surged past $71,000 during Asian trading hours, reflecting a 3% increase over 24 hours, while the CoinDesk 20 index rose by 2.65%.

Fidelity's FBTC attracted $378 million, the largest inflow among its peers. BlackRock’s IBIT followed with $270 million, and Grayscale’s GBTC, known for its previous outflows, saw $28 million in new investments. This surge in inflow activity comes amidst a broader bullish trend in the market following a challenging period from mid-April to early May, which saw several days of net zero or negative inflows, particularly affecting major ETFs like BlackRock’s IBIT.

Bloomberg analyst Eric Balchunas noted on social media platform X that bitcoin ETFs have accumulated $3.3 billion over the past four weeks, bringing their year-to-date total to over $15 billion. The increase in inflows coincides with the recent approval of ether (ETH) spot ETFs for U.S. listing and a generally positive sentiment towards cryptocurrencies in the ongoing U.S. presidential campaign.

US political change could expose crypto to $20T industry

The crypto space could access trillions from the financial advisory industry once U.S. regulators clarify legal uncertainties, says Matt Hougan, Chief Investment Officer of Bitwise. He explained that regulatory uncertainty has prevented financial advisors from increasing crypto exposure over the past five years.

Hougan believes the U.S. is moving toward regulatory clarity, potentially opening the $20 trillion financial advisory industry to crypto investments. He suggests a significant portion of this wealth could flow into crypto once regulatory barriers are removed. "Imagine the impact if Wall Street fully embraced crypto," Hougan remarked.

He pointed to a shift last month when Democrats joined Republicans to repeal Staff Accounting Bulletin 121 and when the House passed the Financial Innovation and Technology for the 21st Century Act (FIT21), both considered wins for the crypto sector. Additionally, the Securities and Exchange Commission (SEC) approved spot Ether (ETH) exchange-traded funds (ETFs) on May 23, after months of speculation about potential rejection.

However, Hougan noted that President Joe Biden's veto of the SAB 121 repeal indicates ongoing challenges for the crypto industry. "But this is a minor setback. Crypto has faced headwinds for a decade," he added.

Hougan believes the crypto market holds significant untapped potential, largely unnoticed by those outside the crypto community. He observed a general lack of awareness about crypto-related political developments at industry conferences.

"If people grasped the implications of the regulatory shift in Washington, the crypto market would reach new all-time highs," Hougan argued. Despite setbacks like the veto of SAB 121’s repeal and FIT21’s uncertain fate in the Senate, he acknowledged that no substantial policy changes have yet occurred in Washington.

Solana emerges as an institutional favorite following PayPal USD launch

Solana, the fourth-largest blockchain by total value locked (TVL), is rapidly becoming a preferred network for institutional adoption. Robinson Burkey, co-founder and Chief Commercial Officer of Wormhole Foundation, notes that more financial institutions are integrating with Solana to "future-proof" their services.

Burkey wrote in a research note shared with Cointelegraph: “Solana and institutions make sense. Leaders like PayPal, Stripe, and Visa must future-proof their offerings by meeting forward-thinking users on emerging platforms. Expect more institutional moments for Solana in the coming years."

On May 28, PayPal expanded its PayPal USD (PYUSD) stablecoin to the Solana network, marking its first move beyond Ethereum. This integration allows Solana users to make inexpensive transactions using PYUSD, broadening the stablecoin’s utility for everyday purchases.

In September 2023, Visa launched USD Coin (USDC) on Solana, making it the second network to support the stablecoin after Ethereum.

Solana is one of the most scalable blockchain networks, capable of handling up to 65,000 transactions per second (TPS) at an average cost of $0.0025. This significantly outpaces Ethereum’s 15 TPS and higher gas fees.

Ran Goldi, Vice President of Payments at Fireblocks, stated that Solana’s infrastructure is well-suited for traditional payment institutions, which will drive more institutional adoption. "With confidential transfers, we will see additional names adopting the blockchain into their flows," Goldi added.

DefiLlama data shows Solana as the fourth-largest blockchain with over $4.7 billion in TVL, accounting for 4.49% of the total TVL across all blockchains.

Tristan Frizza, founder of Zeta Markets, suggests that Solana could be the next cryptocurrency to gain a spot exchange-traded fund (ETF). With major partnerships like Visa, Stripe, and PayPal, institutional adoption of Solana is expected to grow.

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