Ben Strack and Casey Wagner are pleased to welcome you to the On the Margin Newsletter. You’ll discover the following in this edition:
- What Trump Said (and Didn’t Say) At Bitcoin 2024
- Grayscale has almost launched its BTC second-spot fund, in an effort to make up for lost time.
- There’s more than just FOMC Week going on. We’ve got your back.
Trump’s promises are not very specific
On the Margin is back for another edition!
After a busy and exhausting weekend attending the Bitcoin 2024 Conference in Nashville, I’m in recovery mode. Blockworks.co is going to have more information on the conference soon.
Most likely, you saw this event’s main headline: The former president Donald Trump wants to develop a cryptocurrency “stockpile,” Cynthia Lummis of Wyoming, a Republican senator, is introducing legislation in an attempt to bring this about.
Trump spoke for an hour Saturday afternoon to a group of about 10,000 people (according the conference organizers). Former President took to the stage one hour late, due to security issues that the Secret Service needed addressed.
The event was more of a Trump Rally than Bitcoin 2024’s keynote speech. He spoke for about 50 minutes and often strayed so far away from bitcoin or crypto topics. For example, he criticized electric car regulation and referred to Sen. Elizabeth Warren. “Pocahontas” — bringing back the slur he’s used since 2017 — and claimed Biden’s team threatened to invoke the 25th amendment to force his resignation).
One of his promises included a promise to fire SEC chair Gary Gensler “on day one” — which, as we’ve covered in this newsletter, may not be possible. Ross Ulbricht has been in prison since 2015 and he said he’d commute his sentence. Trump hasn’t explained why he hasn’t commuted or pardoned Ulbricht while he was president. His team also hasn’t responded to our request for comment.
Trump’s most important promise made on Saturday was that he would not impose any new taxes. “keep 100% of all bitcoin the US government currently holds or acquires.” Although he didn’t mention specifically the DOJ, or US Marshals Service which regularly auctions off seized cryptocurrency, this is what he was referring to.
“As you know, most of the bitcoin currently held by the United States government was obtained through law enforcement action,” Trump remarked. “You know that they took it from you. Let’s take that guy’s life. Let’s take his family. His house. His bitcoin.”
Robert F. Kennedy Jr. is another presidential candidate who wants to purchase 1,000,000 BTC. Lummis, who appeared moments after Trump had left the stage and waved a pile of papers that she claimed was a law promising just this, emerged.
“Here it is,” “The senator said as he held the bundle up.” “This is the Bitcoin Reserve Bill.”
The bill, which has not yet made it to the Senate floor, seeks to have the US government acquire 1 million BTC — roughly 5% of the global supply. The BTC sold would be only to lower the nation’s debt.
“We will be debt-free because of bitcoin,” Lummis said.
Lummis had been expected to speak before Trump. He appeared the previous day on stage with Tim Scott.
The Trump campaign, if I were to guess it, is content with a vague platform and soundbites. Free Ulbricht, fire Gensler, mine more bitcoin in America, etc. It’s enough to garner broad industry support — and money — without getting too technical, which could risk alienating parts of the industry.
Lummis can take care of the laws that are unlikely to pass this year (at any rate).
— Casey Wagner
$ 14.8 billion
The trading volumes last week for crypto investment products, according to CoinShares — marking the highest level since May.
The debut of US spot ether exchange-traded funds (ETFs) boosted this number. They saw a volume of $1.1 billion on the first day of their existence, July 23.
Volumes do not equal net flows for these ETH funds. Take a look at $1.5 Billion that was poured from the Grayscale Ethereum Trust.
The ETH funds of BlackRock Bitwise Fidelity together had net inflows totaling $927 millions during the first trading day.
The new bitcoin ETF should be available soon
Grayscale is set to enter the US spot bitcoin ETF category…again.
The SEC on Friday cleared the 19b-4 proposal — filed by NYSE Arca — for the Grayscale Bitcoin Mini Trust. It is anticipated that the agency will soon approve registration of the ETF. “effective,” Making a last step before launching.
Grayscale was unable to maintain its 1.5% commission on the $18,4 Billion currently held by the trust, despite the outflows.
Grayscale is now looking to increase its market share by offering the lowest-cost fund in this category. At 0.15%, it is set to undercut all of its competitors — the lowest of which is Franklin Templeton’s BTC fund, at 0.19%.
Grayscale Ethereum Mini Trust was launched in the last few days at a competitive price. This fund saw $164 in the first four trading sessions, whereas its more expensive (2.5%) Ethereum Trust lost $1.5 Billion.
This initial flow of $164 million tells us very little about the BTC version, as it is a completely different asset. There’s also the fact that ETH Mini Trust was launched at the same moment as other trusts.
Grayscale has its hands full with the upcoming Grayscale trust. It’s nothing new for asset managers to offer a lower-cost version of what they currently sell.
Bitcoin Mini Trust, a new bitcoin exchange-traded fund (ETF), is about to start trading. US Bitcoin ETFs had already received net inflows totaling $17.6bn since January. BlackRock’s and Fidelity’s products have seen the most positive flow of money, with $19.7 and $10 billion respectively.
Grayscale’s Bitcoin Mini Trust may be attractive to some investors but catching up with the financial giants in this field is not easy.
Ben Johnson, Morningstar’s Head of Asset Management Client Solutions, summarised the Blockworks challenge previously: “There are already abundant low-cost options with significant assets under management and oodles of liquidity — all of which offer exposure to the exact same asset.”
Aside from the attractive price points for the bitcoin- and ether-focused mini trusts, the tickers Grayscale secured for each — BTC and ETH — are clutch.
It is very important for investors to be able to make a quick allocation to a cryptocurrency offering through their brokerage account.
— Ben Strack
Our Radar
Fed Week has arrived. The markets are betting that central bankers will hold interest rates at Wednesday’s meeting, a move many anticipate. Other figures are important to remember. What are we watching?
- The FOMC’s meeting this week is likely to end in a cut, but the Fed’s Jerome Powell will have the most impact on the outcome. The key will be how strongly he suggests (or doesn’t suggest) a September interest rate cut. The markets will suffer if he doesn’t give any indication that the rates may start falling this fall.
- This week, there will be a lot of data on jobs: JOLTS, ADP’s employment report, Thursday’s initial claims report, and of course the monthly jobs report, on Friday. The markets will be looking at a few key things: a downward trend in wage inflation (wage inflation is the Fed’s top concern), easing in the labor market, and lowering of the unemployment rate.
- The earnings week is also going to be big. Meta, Apple, Amazon, and Coinbase all have earnings scheduled for the next days. Watch your email on Wednesday for the special pre-Coinbase edition of On the Margin.
Bulletin Board
- Bitcoin shot up to a little over $70,000 on Monday before slipping a bit. The price of bitcoin was $67.375 as at 2 pm ET. This is down roughly 1% in comparison to 24 hours earlier.
- 21Shares is a cryptocurrency-focused asset manager that announced on Monday its US Spot ETH ETF was more transparent after integrating Chainlink Proof of Reserve into Ethereum’s mainnet. This move was made after Bitwise announced that all Ethereum addresses associated with its product would be published.
- Several big public crypto companies are set to report Q2 earnings on Thursday — namely Coinbase, Marathon Digital, MicroStrategy and Galaxy Digital. Watch Blockworks.co and this newsletter for updates.
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