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New Hope for a Bitcoin ETF Approval Sparks a Bitcoin Rally

July 3, 2023

Samara Asset Group's corporate news image, White logo on black background.Samara Asset Group's corporate news image, White logo on black background.Samara Asset Group's Ad Hoc news image, White logo on black background.Samara Asset Group's Ad Hoc news image, White logo on black background.

Stay up to date with our monthly market commentary:

  • Wall Street is betting on Bitcoin with spot ETFs.
  • Except for Bitcoin, the crypto asset market softened in June.
  • Bitcoin (BTC) is up by 8.6%, while Ether (ETH) is down by 2.1% versus last month.*

Market Overview - June

While altcoins dropped in value across the board (with some dropping by as much as 25%), the price of Bitcoin rallied significantly following the announcement of BlackRock filing for a spot Bitcoin ETF, pushing the value of the world’s leading cryptocurrency back up to over $30,000 per coin. 

A spot Bitcoin ETF listed on a U.S. exchange could see a massive influx of institutional and retail investor funds flowing into Bitcoin, which is why the potential approval of a Bitcoin ETF is such a big deal. To date, only Bitcoin Futures ETFs have been approved by the SEC, but the regulator has still denied the listing of a spot Bitcoin ETF. 

However, with BlackRock’s incredible 575–1 approval rate for ETF filings, the odds have never looked better for a spot Bitcoin ETF to finally receive approval from the SEC. 

Additionally, WisdomTree, Valkyrie Investments, and Fidelity followed suit to also file Bitcoin ETFs in the hope that if BlackRock’s ETF would be approved, they could issue their own to potentially profit from the growing demand for Bitcoin as an investment asset. 

With these ETFs, we could finally see an accessible, regulated Bitcoin investment vehicle that would allow both Wall Street and Main Street to seamlessly invest in Bitcoin in a format that they are already used to. 

It’s all in the hands of the SEC now. If they decide to approve the first spot Bitcoin ETF on U.S. soil, this would be the long-awaited end to the Bitcoin ETF saga, which started in 2014 when the Winklevoss Twins first attempted (and failed) to list their COIN ETF in the U.S. 

Crypto Asset Market Performance Review 

June was a down month for the vast majority of the crypto asset market as a result of regulatory actions against Coinbase and Binance in the U.S. Most gains made by altcoins earlier this year disappeared due to fears that many of them could become classified as securities by the SEC. 

The only cryptocurrency that didn’t feel the selling pressure was Bitcoin. Bitcoin rallied by over 8% to close the month above the $30,000 mark, proving, once again, that it’s built differently than other crypto assets. 

Much of that success was due to announcements by big traditional financial institutions, such as BlackRock, Fidelity, and Valkyrie, applying for spot or leveraged Bitcoin ETFs and applications for non-custodial crypto products or services.

In short, Wall Street is taking another (rather favorable) look at Bitcoin, but this time they’re ready to invest and integrate it into their financial product offerings. The demand for regulated Bitcoin products is here, and leading financial institutions are looking to fill that gap. 

These announcements sent the Bitcoin price skyrocketing, resulting in the third-best month in 2023, just behind the gains we saw in January and March.

Bitcoin Tech Update

June was another exciting month for Bitcoin technology developments, most notably with an increase in adoption and usage of the Lightning Network. 

Binance Discovers the Lightning Network

The Lightning Network is the ultimate game changer for Bitcoin. Not only does it enable micropayments at low costs and transactions at the speed of light, but it also can facilitate payment routes. 

Some bigger exchanges have realized this potential and implemented Lightning in 2020 or 2021, namely Bitfinex and Kraken. 

In June, we saw a huge Lightning Channel opening channels with other exchanges. It was called Binance, and just a few hours later, the crypto exchange confirmed it was them. The demand for Lightning is there, but the team still has some tech issues to sort out. However, we can expect Lightning payments and possibly opening channels with Binance very soon. 

Bitcoin traders can benefit from instant deposits and withdrawals, thanks to the Lighting Network, reducing the time and cost spent on moving funds to and from exchanges. 

Bitcoin-Powered Social Media Protocol Nostr Surpasses 1 Million “Zaps”

While the most popular nostr application Damus is having challenges with the Apple App Store, the Bitcoin-powered social media protocol nostr continues to grow, and users continue to zap each other (i.e., send small amounts of Bitcoin via the Lightning Network). 

Earlier in June, nostr celebrated the one million zaps milestone, meaning one million users have sent some satoshis (the smallest unit of Bitcoin) via the Lightning Network to each other, either to reward someone for great content, to attach a special message, or to say thanks for a particular post. 

Nostr had quite an impressive start to the year with an influx of new users coming on board, mainly because of an investment by Jack Dorsey and his vocal support of the protocol. This milestone proves the demand for Value4Value solutions and censorship-resistant platforms exists. 

Institutional Interest in Bitcoin

The story of the month was the institutional interest in Bitcoin. Most of the focus was on the different Wall Street giants applying for spot Bitcoin or leveraged Bitcoin ETFs. Still, we also had some exciting news for non-custodial solutions and retail investors in Hong Kong.

Everyone Wants a Bitcoin ETF

Whether it was BlackRock, Wisdom Tree, Valkyrie Investments, or Fidelity, they have either applied or will soon apply for a spot Bitcoin ETF. While we have some institutions among them, Fidelity mainly, who were denied such an ETF in the past, the overall sentiment is positive. 

But this is only part of the story. There are also Bitcoin ETF news coming out of Asia. HSBC Hong Kong has announced they’ll allow their customers to trade Bitcoin ETFs. This news marks a significant shift, as HSBC is known to be more of a conservative bank that so far has relied on traditional financial products. 

Whether it’s in the U.S., Europe, or Asia doesn’t matter. Big financial institutions have caught the Bitcoin bug and want to move forward. At least for the applications in the U.S., the decision on whether these companies can move forward quickly lies with Gary Gensler and the SEC. 

Non-Custodial Exchanges and Solutions 

While the financial world was excited about the Bitcoin ETF news, there was also some exciting news for non-custodial solutions and exchanges. 

Citadel Securities, Fidelity Investments, and Charles Schwab have announced backing in EDX Markets, a new cryptocurrency exchange. The exchange is not accessible yet, but its non-custodial matter makes it unique. 

Unlike crypto exchanges of the past, which were always custodial and holding clients’ funds, EDX will serve as a marketplace where firms can execute trades. This eliminates the risk of bank-run style failings that the crypto industry witnessed in 2022 with Celsius and others.

In the same week, we also read about Deutsche Bank and how they applied for a digital asset license. Whether the final product would be non-custodial is yet to be determined; however, another major financial institution is looking into the power of digital assets and how they can offer it to their client base. 

One thing is certain this month: institutional interest has increased, and the biggest names in finance are ready to embrace Bitcoin and the possibilities ahead!

Bitcoin on Balance Sheets

In June, we saw another announcement by Michael Saylor and MicroStrategy that the largest public Bitcoin holder has increased its holdings. The company purchased an additional 12,333 BTC and now holds 152,333 BTC on its balance sheet. 

The analytics and software giant is also expected to launch their Lightning Network products at the end of Q3. So far, the Bitcoin bet is paying off perfectly for Saylor and MicroStrategy, as he explained in his talk at BTC Prague earlier this month.

Samara Sells Stake in Block.one

Last but definitely not least, we also have some company news. On June 19, we announced the sale of our entire stake in crypto company Block.one for a cash consideration of USD 118.9 million, or roughly EUR 109.7 million. 

Considering the book value of the Block.one stake on Samara’s balance sheet, the transaction is expected to result in a profit on the sale of approx. USD 52 million, or EUR 48 million. 

Against this background, Samara’s management intends to propose a dividend of EUR 1.30 per share for a total amount of approx. EUR 74 million, to be resolved at an extraordinary shareholder meeting.

*Closing price data is from June 28, 2023