Crypto Chronicle - 30/01/24

Welcome to the 23rd edition of the Crypto Chronicle, brought to you by Imperial Wealth.

You can listen to todays episode here.

News

SEC Postpones Verdict on Fidelity’s Proposed Ethereum Spot ETF Until March

The Securities and Exchange Commission (SEC) has extended the deadline for deciding on Fidelity’s spot Ethereum exchange-traded fund (ETF) proposal until March 5, citing the need for thorough evaluation. 

Fidelity submitted the proposal in November, referencing a court ruling that criticised the SEC’s unclear rationale for rejecting spot crypto ETFs while allowing futures-based products. 

The extended timeframe allows the SEC to consider approval, disapproval, or further proceedings. Analysts anticipate the significance of late May deadlines, linked to the SEC’s decision on VanEck’s competing spot Ethereum ETF proposal. 

Public expectations are divided, with a 54% chance of spot Ethereum ETF approvals according to a Polymarket prediction market.

Read more here: https://imperialwealth.com/news/sec-postpones-verdict-on-fidelitys-proposed-ethereum-spot-etf-until-march 

The Securities and Exchange Commission (SEC) postpones its decision on BlackRock’s Ethereum spot ETF to March.

The US Securities and Exchange Commission (SEC) has delayed the decision on BlackRock’s Ether exchange-traded fund (ETF), citing the need for more time to review the proposed rule change. 

The delay, announced one day before the January 25 deadline, falls within the SEC’s 240-day period. 

Bloomberg ETF analyst Eric Balchunas predicts that decisions on all pending Ether ETFs will be made in May, aligning with the SEC’s handling of Bitcoin ETFs in January. 

Other Ether ETF applicants face final decision deadlines in May, June, and August. 

Balchunas earlier estimated a 70% chance of Ether ETF approval by May.

Read more here: https://imperialwealth.com/news/the-securities-and-exchange-commission-sec-postpones-its-decision-on-blackrocks-ethereum-spot-etf-to-march

First Bitcoin ETF Application Submitted to Hong Kong SFC

Hong Kong’s Securities and Futures Commission (SFC) received its first spot Bitcoin ETF application from Harvest Hong Kong. 

This comes shortly after the U.S. SEC approved a similar ETF. Harvest aims to launch the ETF post-Chinese New Year, with other financial institutions expressing interest. 

Around 10 institutions are preparing for spot Bitcoin ETFs, with Venture Smart targeting Q1 2024. Existing crypto firms, including Samsung Asset Management, are expected to join the trend. 

Hong Kong’s pro-crypto regulations since 2023 have positioned it as a prominent crypto hub in Asia, with the SFC ready to consider various fund applications.

Read more here: https://imperialwealth.com/news/first-bitcoin-etf-application-submitted-to-hong-kong-sfc

BlackRock Bitcoin ETF Surpasses $2 Billion in Assets as GBTC Outflows Decrease by 50%

Bitcoin reached $43,000 at the start of the FOMC week, concluding the first week of ETF flows successfully. 

Bitcoin ETFs absorbed GBTC outflows, maintaining resilience. However, challenges emerged as GBTC experienced daily outflows of $360 million, marking a 50% decrease from the peak. Bloomberg Intelligence’s James Seyffart noted over $5 billion exited GBTC since its ETF transition. 

On January 26, spot Bitcoin ETFs attracted $759 million in net inflows despite GBTC challenges. BlackRock’s iShares Bitcoin Trust held 52,000 BTC worth over $2 billion. 

Investor Rajat Soni highlighted substantial implied buy volume, emphasising BlackRock clients’ significant BTC purchases.

Read more here: https://imperialwealth.com/news/blackrock-bitcoin-etf-surpasses-2-billion-in-assets-as-gbtc-outflows-decrease-by-50 

SEC Attributes ‘SIM Swap’ Attack as Cause for Unauthorised Access to X Account Before Formal Bitcoin ETF Approval

The United States Securities and Exchange Commission (#SEC) fell victim to a “SIM swap” attack, leading to a false announcement on Jan. 9 about the approval of spot Bitcoin exchange-traded funds (#ETFs).

Following the incident, the SEC revealed that an unauthorised party reset the 

SECGov account password after obtaining control of the SEC cell phone number through a SIM swap attack. 

Law enforcement is investigating the incident, while the SEC disclosed that six months earlier, a staff member removed multifactor authentication due to access issues. 

The SEC clarified that there’s no evidence of unauthorised access to other systems or accounts. 

On Jan. 10, the SEC officially approved multiple spot #Bitcoin ETF applications, with most trading starting on Jan. 11.

Read more here: https://imperialwealth.com/news/https-imperialwealth-com-news-sec-attributes-sim-swap-attack-as-cause-for-unauthorised-access-to-x-account-before-formal-bitcoin-etf-approval 

Customers Experience Fresh Wave of Trezor Phishing Emails Following Recent Support Portal Breach

Trezor, a hardware wallet provider, acknowledges a surge in malicious emails is due to unauthorised use of their third-party email provider. 

The fraudulent emails prompt users to upgrade their “network” or risk fund loss through a harmful link. Trezor hasn’t confirmed fund losses but advises users not to enter their recovery seed for security. 

An ongoing investigation reveals an unauthorised individual accessed Trezor’s email database, utilising a third-party service for the deceptive emails. 

The incident follows a cybersecurity event at MailerLite, with phishing attacks causing over $3.3 million in losses. It’s unclear if Trezor uses the same email domain provider.

Read more here: https://imperialwealth.com/news/customers-experience-fresh-wave-of-trezor-phishing-emails-following-recent-support-portal-breach

Virginia in the United States Introduces Legislation Safeguarding Rights for Digital Assets Mining

The Virginia State Senate has introduced a bill, proposed by Senator Saddam Azlan Salim, outlining regulations for digital asset mining and transactions. 

The bill offers exemptions for mining activities and prevents discrimination against miners. Additionally, it grants issuers and sellers of digital assets exemptions from securities registration requirements under certain conditions. 

Companies providing mining or staking services are not classified as financial investments but must submit a notice for exemption. 

The legislation also encourages cryptocurrency adoption in daily transactions by providing tax benefits, allowing individuals to exclude up to $200 per transaction from net capital gains starting January 1, 2024.

Read more here: https://imperialwealth.com/news/virginia-in-the-united-states-introduces-legislation-safeguarding-rights-for-digital-assets-mining 

X Introduces Dedicated Payments Account, Sparking Speculation Within the Cryptocurrency Community

Elon Musk’s “everything app,” X, is set to introduce a payments feature in mid-2024, sparking speculation within the crypto community about potential cryptocurrency integration. 

The app’s dedicated account, adorned with a gold badge, indicates verification as an organisation affiliated with X. 

Meanwhile, Musk has incorporated Dogecoin for Tesla’s merchandise store payments, hinting at its potential inclusion in X. 

Analysts scrutinise Musk and X’s subtle cues, suggesting a growing interest in Dogecoin for future projects. 

The crypto community awaits confirmation on whether X’s payments feature will extend beyond traditional fiat currencies.

Read more here: https://imperialwealth.com/news/x-introduces-dedicated-payments-account-sparking-speculation-within-the-cryptocurrency-community

Technical Analysis

Last weeks price action saw us finally dip after our great .618 rejection (major upside GOLDEN POCKET), in a -20% rejection, right to the CME gap and range golden pocket around $38.5k and has since fantastically bounced to above $43k, where we trade around $43.5k.

A reminder of this great Golden Pocket HTF resistance:

As noted, we caught the CME gap and range golden Pocket support, wiping out a large amount of liquidity, and bouncing from a strong demand level.

Please see the relative chart below:

Please set the CME chart below:

This could be a result of the “sell the news” hype over after the ETF announcement, with FTX/GBTC selling lowering/halting, meaning sell pressure is less, whilst net ETF inflows remain positive, meaning demand is now being met with positive price action.

Still not out of the woods yet.

Confirmations of closes above $45k would invalidate a potential head and shoulders pattern and also now remove the upside local golden pocket retracement from our recent high to our recent dip low.

Confirmations of all guns blazing if we in fact just put in our most recent HTF bullish market structure HL, and make a higher high above $50k. That would be something.

Please see the chart below:

That is if the recent low we just put in was our next HL.

I am still not ruling out a move to the $32-$34k level though if bearish price action comes back, this could look something as such:

Trading Academy members are privy to all plans, with a buy sent out today, and plans to buy if lower is seen!

Ultimately, we believe over the long term,

If you want to be privy to all of these charts, information and select buys in the bull market, sign up to the Trading Academy!

Mining

Per Taylor: Bitcoin remains strong above $43,000 right now which is positive compared to the $39,000 last week! So a good 10% bump in price. 

We are also seeing a 3% difficulty drop seen last in the last fortnight. Looks as though transaction volume has slowed down which has seen fees drop to 0.4btc per block on average which is not ideal as well as seeing a 10% difficulty jump in the coming 3 days. 

We could be seeing some short squeeze coming into mining in the short term. However, we all know we are not necessarily mining BTC for now, this is a long term game. 

Other networks are all stable currently with not much to report. Kaspa has remained stable, just a small drop in profitability mainly due to the emission schedule. 

Doge had seen a 20% drop in difficulty which is lovely for L7 miners, Dash has seen a big jump on 56% in difficulty, however this was mainly due to it dropping by the same last months, so just jumping around. CKB seeing a 18% drop in difficulty is good for K7 miners! 

Best buys right now as the new Thailand facility for S19k machines at $0.10c power. 

Lower power rates means easier ongoing costs as well as increased profitability.

If you wish to speak to Taylor on any of these machines, feel free to book a free online consultation here!

That’s it for this weeks edition, stay tuned for next weeks!

Thanks!