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Bitcoin ETFs captured over 4% of BTC supply in Q1

Bitcoin ETFs captured over 4% of BTC supply in Q1

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In just three months since their approval, Bitcoin ETFs have swiftly accumulated a sizable percentage of the total BTC supply. This influx has propelled Bitcoin to new all-time highs and spurred demand for crypto-assets, including the resurgence of meme coins, which have also benefited from reduced gas fees on the Ethereum blockchain due to the Dencun upgrade.

Meanwhile, on the macro level, the Bitcoin-Ether ratio, an indicator that compares the prices of the two largest tokens, has reached a three-year high, potentially signaling a waning risk appetite in the crypto market. Analysts view this ratio as an early warning sign of sentiment shifting from FOMO to fear, with Ether acting as a proxy for smaller tokens. Cooling demand for ETFs and the upcoming Bitcoin halving event have also contributed to market uncertainty.

Another recent development involves Ripple, which has revealed its plans to launch a dollar-pegged stablecoin later this year, deployed on the XRP Ledger and the Ethereum blockchain. Aside from these two initial deployments, Ripple said it also wants to expand this to other blockchains and DeFi platforms. Ripple aims to address the growing demand for stablecoins with a compliant and trusted solution, targeting institutions seeking large-scale payment integration in the rapidly expanding stablecoin market.

Today’s Newsletter

  • Bitcoin ETFs captured over 4% of BTC supply in Q1: IntoTheBlock
  • Bitcoin-Ether ratio flashes potential warning about crypto rally
  • Ripple to debut a dollar-pegged stablecoin on XRP Ledger and Ethereum this year

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BITCOIN

Bitcoin ETFs captured over 4% of BTC supply in Q1: IntoTheBlock

Bitcoin ETFs have rapidly absorbed over 4% of the total BTC supply in less than three months, following the SEC’s approval of several spot Bitcoin ETFs and the transformation of the Grayscale Bitcoin Trust (GBTC) into an ETF. This development has profoundly influenced the market, with addresses holding at least 1,000 BTC seeing their balances soar to the highest levels since June 2022.

The total Bitcoin held by these whales has increased by 220k BTC (approximately $14.2 billion), with 210k BTC attributed to net inflows into ETFs. Lucas Outumuro, Head of Research at IntoTheBlock, states that these financial instruments have simplified the process of investing in Bitcoin, attracting both institutional and retail investors by eliminating the complexities of centralized exchanges and private key management.

As the market’s momentum shifts towards a bull run, traders are increasingly seeking higher-risk assets, with meme coins emerging as a prime target. Despite high interest rates and the absence of stimulus checks, demand for meme coins has reached its peak since 2021.

The market capitalization for this category has nearly tripled in 2024, with Dogecoin, Shiba Inu, and other meme coins experiencing significant price increases. The resurgence of meme coins in the Ethereum ecosystem can be partly attributed to the successful implementation of the Dencun upgrade, which has led to a drastic reduction in gas fees, particularly on Coinbase’s Base layer-2 network. [cryptobriefing]

MARKETS

Bitcoin-Ether ratio flashes potential warning about crypto rally

The Bitcoin-Ether ratio, which compares the price of Bitcoin, the largest digital asset, with second-ranked Ether, has reached a three-year high, scaling 20 this week. This ratio is seen by some analysts as a potential warning sign about the current crypto rally, reflecting more resilient demand for the oldest cryptocurrency rather than its smaller rival.

QCP Capital, a crypto asset trading company, suggests that this pattern could be “a very early signal” of FOMO (fear of missing out) morphing into “fear” if Ether is viewed as a proxy for sentiment toward smaller tokens.

Bitcoin recently reached a record high of $73,798 in mid-March, driven by a surge of inflows into dedicated US exchange-traded funds (ETFs) that debuted in January. However, the token has since retreated about 9% as ETF demand cooled, while a gauge of smaller digital assets has slumped even more over the same period, shedding some 20%.

Stifel Nicolaus & Co. strategists, including Barry Bannister, have noted that a potential Bitcoin top, as investors lose appetite for cryptocurrencies, “signals a weaker stock market.” Crypto traders are now awaiting the four-yearly Bitcoin halving event, which reduces new supply of the token, although doubts have emerged over whether the halving will live up to its reputation of being a bullish development. [bloomberg]

STABLECOINS

Ripple to debut a dollar-pegged stablecoin on XRP Ledger and Ethereum this year

The firm behind XRP has announced plans to issue a stablecoin tied to the US dollar later this year. The stablecoin will be 100% backed by USD deposits, short-term US bonds, and other cash equivalents, and will be deployed on the XRP Ledger and the Ethereum blockchain, with plans to extend to other blockchains and DeFi platforms.

To ensure transparency and address potential concerns about reserve quality, Ripple will publish monthly attestations of its stablecoin reserves, which will be audited by a reputable third-party accounting firm. Brad Garlinghouse, Ripple CEO, explained that the launch is aimed at addressing the growing demand for stablecoins with a compliant and trusted solution while driving development and use cases within the XRPL ecosystem.

Ripple claims its stablecoin offers a unique combination of features tailored for enterprise use, regulatory compliance, and a thriving developer ecosystem. The firm seeks to fill a gap in the market for institutions seeking stablecoin integration for large-scale payments. Stablecoins play a vital role in the crypto ecosystem, with over 80% of trading volume on major centralized crypto exchanges in 2022 involving stablecoins.

Ripple CTO David Schwartz expects the stablecoin market, currently valued at around $150 billion, to reach over $2 trillion by 2028. While the market is currently dominated by Tether’s USDT and Circle’s USDC, Schwartz sees opportunities for niche players to carve out their space in this highly profitable market. [cryptobriefing]

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