Daily News | BlackRock May Replace Grayscale GBTC as the "King of Liquidity"; A Dormant BTC Whales With Over $2B Becomes Active; Vitalik Buterin is Optimistic on the Development of L2

2024-01-18, 03:55

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## Crypto Daily Digest: BlackRock May Replace GBTC, dYdX's 24-hour trading volume surpasses Uniswap
Firstly, let's take a look at the latest developments in <a href="/id/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> ETFs after their listing.

On January 16th, the total trading volume of 10 spot Bitcoin ETFs exceeded the total trading volume of all 500 ETFs launched in 2023 by more than three times. Bloomberg ETF analyst Eric Balchunas stated that in contrast, the total trading volume of all 500 ETFs launched in the United States last year on January 16th was only $450 million.

BlackRock's iShares Bitcoin Trust has attracted a net inflow of over $497 million in the past three days, becoming a clear leader. In the past three trading days, an estimated $1.1 billion of funds have flowed out of the Grayscale spot Bitcoin Exchange Traded Fund (ETF), and investors are eager to withdraw from the fund. Previously, the fund's discount rate had narrowed to the lowest level in nearly three years.

Although the Grayscale Bitcoin fund still leads in total trading volume (over $5.1 billion), the fund has seen significant outflows as investors seek to reduce their risk exposure. Balchunas added that BlackRock's products will continue to attract the most capital inflows, making it "most likely to replace GBTC as the king of liquidity." Rachel Aguirre, Product Manager at BlackRock US iShares, stated in an interview with Bloomberg that the funds flowing into BlackRock Bitcoin spot ETFs (IBITs) come from retail investors and new investors.

In addition, there is evidence to suggest that investors are shifting from high-rate European ETP products to low-rate US ETF products. During this period (January 11-16), the total outflow of funds from the four largest European Bitcoin ETPs reached $75.2 million.

Analysts believe that the majority of capital outflows may be due to investors turning to one of the new ETFs, as they charge lower fees than Grayscale. However, since the approval of Bitcoin ETFs, Bitcoin has fallen by about 6%. Ilan Solot, co-head of digital assets at Marex Solutions, stated that the approval of Bitcoin ETFs is by no means a large-scale success. The latest price trend of Bitcoin indicates that for highly anticipated products in the market, Bitcoin ETFs have not left a deep impression so far.

It is worth noting that a few days after the start of trading in spot Bitcoin ETFs, dormant Bitcoins worth over $2 billion were transferred through multiple associated addresses. According to monitoring data from Arkham Intelligence, the cryptocurrency tracker, these BTCs underwent a movement in 2019 and have been dormant since 2013. Arkham said, "From a historical perspective, these Bitcoins have all moved at the same time and date."

It is reported that these BTCs have been merged from 49 addresses to 5 addresses, each containing 8000 to 12,000 BTCs, holding a total of 49,858 BTCs with a total value of approximately $2.12 billion.

Next, the latest progress in <a href="/id/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a>'s Cancun upgrade may not be as smooth as imagined.

Ethereum core developer Tim Beiko tweeted that although the Ethereum Goerli test network has completed the Denchun hard fork upgrade, its participation is currently not high, and Blobs are constantly emerging. If the team fails to discover more validator upgrades, a non-conclusive test may be conducted in the next few hours or days.

Ethereum co-founder Vitalik Buterin responded to a discussion on the topic of "Ethereum L2" on his social media platform, stating that for me, in order to be considered a Layer 2 network (L2), it must have stronger security attributes than multi-signatures, even if it does not achieve full guarantees like roll up. Validiums satisfy this point. Optimiums can also achieve this, but it is necessary to rigorously analyze what their exact safety gains are.

Regarding L2, the digital asset research team of asset management giant Franklin Templeton has recently issued an article stating that the Ordinals and second tier solutions of the Bitcoin ecosystem should not be ignored, as these are crucial for addressing Bitcoin's economic security issues and enhancing its practicality as a value storage (SoV).

In addition, It also indicates: "Excited about Ethereum and its ecosystem. Despite experiencing a recent midlife crisis, we see a bright future with many strong driving forces that will drive the Ethereum ecosystem forward. On <a href="/id/price/solana-sol" target="_blank" class="blog_inner_link">Solana</a>, we see that Anatoly uses a single atomic state machine as a powerful use case for decentralized blockchain, which can reduce information asymmetry. We were impressed by all the activities we saw in Solana in the fourth quarter of 2023, including DePIN, DeFi, Meme tokens, NFT innovation and Firedance.”

In terms of DEX, <a href="/id/price/dydx-dydx" target="_blank" class="blog_inner_link">dYdX</a>'s 24-hour trading volume has surpassed <a href="/id/price/uniswap-uni" target="_blank" class="blog_inner_link">Uniswap</a>. CoinMarketCap data shows that the recently migrated dYdX from Ethereum to Cosmos has surpassed Uniswap in 24-hour trading volume, becoming the DEX with the largest daily trading volume.

The data shows that the trading volume of dYdX V4 based on Cosmos reached $757 million within 24 hours, exceeding the $608 million trading volume of Uniswap V3. The trading volume of dYdX V3, which is still in operation, is $567 million, ranking third.

According to data from dYdX, the total transaction volume in the V4 market so far since its launch is $17.8 billion. The total transaction volume of dYdX v3 in 2023 exceeded $1 trillion.

## Macro: "Terrorist data" exceeds expectations, interest rate cuts and bets quickly cool down
On Wednesday, US retail sales data for December recorded a higher than expected 0.6%, while swap contracts showed that the expected probability of the Federal Reserve cutting interest rates in March had dropped to about 50%.

Due to the unexpected impact of "terrifying data" on the market's expectations of the Federal Reserve's interest rate cut, the US dollar index hovered around a new month high, rising to a high of 103.69 during trading. It then gave up most of the day's gains and ultimately closed up 0.04% at 103.37. The US bond yield continues to rise. The 10-year US Treasury yield broke through 4.1% and ultimately closed at 4.105%; The two-year US Treasury yield, which is more sensitive to the Federal Reserve's policy interest rates, returned above 4.3% and closed at 4.360%.

Impacted by the strengthening of the US dollar and US bond yields, spot gold fell more than 1% again and briefly approached the $2000 mark during US trading, with a drop of over $30 from its daily high. It ultimately closed down 1.1% at $2006.22 per ounce. Spot silver ultimately closed down 1.58% at $22.55 per ounce.

International crude oil has rebounded. WTI crude oil started to rise during the US trading session, recovering all lost ground during the day and briefly reaching an intraday high of $72.80, ultimately closing up 1.21% at $72.67 per barrel; Brent crude oil rose 0.37% to $78.01 per barrel. The three major US stock indexes closed lower under pressure. The Dow Jones Industrial Average closed down 0.25%, the S&P 500 Index fell 0.56%, and the Nasdaq fell 0.59%.

It is understood that bond traders have lowered their bets on the Federal Reserve's March rate cut, and the swap rate contract price currently reflects only a 50% chance of a 25 basis point rate cut in the first quarter. Over the past month, traders have repeatedly predicted a rate cut in March due to various economic data, and Goldman Sachs and Barclays have adjusted their expected rate cuts to March. Part of the reason for the lower interest rate bet this time is that the US retail data in December was higher than expected. Traders still expect the Federal Reserve to switch to loose monetary policy this year, estimating a total rate cut of around 140 basis points, lower than the recent estimate of nearly 175 basis points.

Meanwhile, the Federal Reserve's Brown Book, released at the same time, shows that most regions have reported almost no change in economic activity since the last report, and all regions have mentioned signs of a cooling labor market, but businesses are becoming increasingly optimistic about the future.

The Economic Brown Book was prepared by the Philadelphia Federal Reserve and is usually released two weeks before the FOMC meeting. This collection includes information as of January 8th, including narratives and comments on the business conditions of the 12 Federal Reserve regions. Federal Reserve officials are increasingly relying on this information to assess the trends of the economy and inflation. Although government statistics are the gold standard for economic data, these numbers are usually based on past observations and may be subject to revision.

Presently, the market expects that when Federal Reserve decision-makers gather for a meeting from January 30th to 31st, the FOMC will maintain its benchmark interest rate unchanged for the fourth consecutive time. Given that inflation is falling faster than expected, they may also discuss when to start lowering interest rates.

<div class="blog-details-info">
<div>Author:**Byron B.**, Gate.io Researcher
<div>Translator:Joy Z.
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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