Bitcoin falls below $40,000 as Grayscale unwind continues
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Bitcoin’s price has fallen below $40,000 this week, continuing a decline that began after the recent launch of spot Bitcoin ETFs in the US. The outflows from Grayscale’s GBTC Bitcoin Trust have been notably large as investors exit positions to take profits after having been locked into the fund.
US-based crypto exchange Coinbase scored what could be an early legal victory this week in its battle with the SEC. As reported by Bloomberg, a federal judge overseeing the case questioned whether the SEC’s arguments against Coinbase were overly broad in trying to label certain crypto assets as securities. While no final ruling was made, the judge’s skepticism suggests Coinbase has a strong case in arguing that many crypto tokens are not securities and should not be regulated as such by the SEC.
X, the platform formerly known as Twitter and now owned by Elon Musk, has launched a dedicated payments account called @XPayments. This has sparked excitement and speculation in crypto circles about the potential for crypto payments on X, especially dog-themed coins like Dogecoin and Floki which Musk has shown an affinity for in the past. The move shows X continuing its rapid evolution under Musk.
Today’s Newsletter
- Bitcoin falls below $40,000 as Grayscale unwind continues
- Coinbase has 70% chance of full dismissal in SEC lawsuit
- X launches dedicated payments account, crypto community speculates
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BITCOIN
Bitcoin falls below $40,000 as Grayscale unwind continues
While the SEC’s approval of spot crypto ETFs last week was hailed as a milestone, the impact on Bitcoin’s price has so far been negative. Billions in outflows from GBTC are shifting large amounts of Bitcoin to Coinbase to sell. GBTC also carries higher fees than competing ETFs – further incentive for investors to rotate into newer funds.
The price effects underline that inflows and outflows from key funds can profoundly impact Bitcoin’s volatility. Bitcoin has gone through booms and busts before, often in response to regulatory developments. The launch of regulated futures contracts in 2017 preceded Bitcoin’s fall from an all-time high of nearly $20,000. The approval of US ETFs had raised hopes of another price surge – expectations that have for now been dashed. [decrypt]
EXCHANGE
Coinbase has 70% chance of full dismissal in SEC lawsuit
In this long-running legal fight, the core issue is whether tokens listed on Coinbase’s exchange should be considered securities, and therefore subject to strict SEC oversight. Coinbase contends they are more like commodities, outside the SEC’s authority. Crypto regulation remains a major gray area in financial markets, and a definitive court ruling could set an important precedent. For now, the judge’s critical remarks seem to boost Coinbase’s position.
This Coinbase case comes as the SEC has aggressively ramped up crypto enforcement under Chair Gary Gensler. However, courts have sometimes pushed back on the SEC’s broad assertions of authority over digital assets. Last year, Ripple scored preliminary wins in its legal battle with the agency. The Coinbase hearing suggests the SEC could face significant legal limitations on crypto oversight. How this plays out may define the SEC’s future role. [cointelegraph]
ADOPTION
X launches dedicated payments account
The new @XPayments account on X holds a gold verified badge and has already garnered over 100,000 followers, indicating strong interest in the platform’s upcoming peer-to-peer payments feature set to launch mid-2024. Given Musk’s past openness to cryptocurrency payments at his companies like Tesla, many believe crypto may be integrated with X Payments. This could drive further adoption of cryptocurrencies.
In the past, Musk has incorporated Dogecoin for payments on Tesla’s store and promoted the meme coin on Twitter. When Tesla enabled DOGE payments, the price spiked. Additionally, Musk has stated ambitions for X to support users’ “entire financial world”, so crypo payments align with that vision. Actions from Musk’s companies have moved crypto prices before, so the X Payments feature holds significance even beyond the platform. [cointelegraph]
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