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Grayscale Rebalances Crypto Portfolios, Adds Avalanche and XRP While Removing MATIC

Asset management firm Grayscale has recently adjusted the weightings of its cryptocurrency portfolios, resulting in changes to three of its funds.

These adjustments, which were announced on January 5th, are part of Grayscale’s routine quarterly review process.

The impacted funds include the Digital Large Cap Fund (GDLC), the DeFi Fund, and the Smart Contract Platform Ex-Ethereum Fund (GSCPxE Fund).

In the Digital Large Cap Fund, the new allocation breakdown now includes Bitcoin at 69.15%, Ether at 21.90%, Solana at 3.65%, XRP at 2.54%, Cardano at 1.62%, and AVAX at 1.14%.

As a result of this rebalancing, Polygon’s MATIC token has been removed from the GDLC portfolio.

In the DeFi Fund, changes include the removal of the Curve DAO (CRV) token from the portfolio.

The updated basket of assets now consists of Uniswap at 41.11%, Lido DAO at 23.90%, MakerDAO at 13.39%, Aave at 12.63%, and Synthetix.

Interestingly, while MATIC was dropped from one of the portfolios, it still remains in the GSCPxE Fund. This fund’s composition now includes SOL at 44.54%, ADA at 19.77%, AVAX at 13.89%, Polkadot at 9.75%, MATIC at 8.25%, and Cosmos at 3.80%.

Grayscale’s fund managers regularly review and adjust the fund’s weightings to optimize performance in line with current market conditions, risk assessments, and investment objectives. This process is typically carried out on a quarterly basis.

Grayscale utilizes the CoinDesk DeFi Select Index methodology to determine the benchmarks for its funds.

It’s worth noting that funds like the DeFi Fund, designed to provide exposure to decentralized financial markets, have faced challenges due to the recent crypto market downturn.

As of the time of writing, the fund’s shares were trading at $22, reflecting a 9.28% decrease in the past 24 hours.

Furthermore, Grayscale is actively seeking regulatory approval for a spot Bitcoin exchange-traded fund (ETF) in the United States by converting its existing Grayscale Bitcoin Trust (GBTC) into a publicly listed BTC ETF.

The U.S. Securities and Exchange Commission (SEC) is expected to announce its decision on this matter on January 10th.

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BlackRock Plans Workforce Reduction Ahead of Potential Bitcoin ETF Approval

Bitcoin/Crypto News Today

BlackRock, the world’s largest asset manager, is set to reduce its global workforce by approximately 3% in the coming days, according to reports.

This decision coincides with BlackRock’s optimism regarding its spot Bitcoin exchange-traded fund (ETF) application pending approval from the United States Securities and Exchange Commission (SEC).

Sources familiar with the matter have informed Fox Business, as of January 6th, that BlackRock intends to lay off roughly 600 employees as part of its routine internal adjustments, with decisions based on employee performance evaluations from the past 12 months.

BlackRock anticipates that the SEC will approve its Bitcoin ETF application on January 10th, which also marks the SEC’s deadline for deciding on the ARK 21 Shares spot Bitcoin ETF.

However, it’s important to note that the SEC’s official deadline for BlackRock’s application isn’t until January 15th.

This development follows a flurry of amendment forms recently filed with the SEC by spot Bitcoin ETF applicants.

BlackRock’s submission coincided with those of other asset managers, including Valkyrie, Grayscale, Bitwise, Hashdex, ARK 21Shares, Invesco Galaxy, Fidelity, Franklin Templeton, VanEck, and WisdomTree.

These filings represent one of the final steps in the SEC approval process, allowing U.S. exchanges to list shares of investment securities directly tied to cryptocurrency.

Notably, in December 2023, Cointelegraph reported that BlackRock had made adjustments to its Bitcoin ETF application with the goal of increasing Wall Street banks’ participation.

They achieved this by introducing new shares within the fund that can be purchased with cash, rather than just cryptocurrency.

This in-kind redemption model allows major banks to act as authorized participants for the fund, thereby bypassing restrictions that previously prevented them from holding Bitcoin or crypto directly on their balance sheets.

In summary, BlackRock is streamlining its workforce as it awaits a potential SEC approval for its Bitcoin ETF application.

This move aligns with broader efforts to make cryptocurrency investments more accessible to traditional financial institutions, potentially opening up new avenues for institutional participation in the crypto market.

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Traders Gamble on Bitcoin ETF Approval with $1.5 Million in Bets on Polymarket

Bitcoin/Crypto News Today

As anticipation builds within the cryptocurrency community for the United States Securities and Exchange Commission’s (SEC) forthcoming decision regarding spot Bitcoin exchange-traded fund (ETF) applications, a unique form of speculation has emerged.

Traders are seizing this moment of suspense to wager on the approval outcome by January 15.

On the decentralized gambling platform Polymarket, which operates on the Polygon blockchain, traders are placing their bets with a simple “Yes” or “No” on whether the Bitcoin ETF applications will receive approval.

Presently, approximately $1.5 million worth of bets have been staked, and the majority of traders are favoring the “Yes” outcome.

The value of each share on Polymarket represents the odds of the respective approval or rejection, mirroring the volatility of the crypto market.

At the time of writing, a “Yes” share costs $0.79, while a “No” share is priced at $0.21.

An anonymous top holder known as “kiwi” has invested around $421,000 in “Yes” shares, while the leading holder for “No” holds only about $15,000 in “No” shares.

Polymarket has set the resolution date for January 15, 2024, at 11:59:59 pm Eastern Time, stating that the market will resolve as “Yes” if any spot Bitcoin ETF gains SEC approval by that deadline; otherwise, it will resolve as “No.”

This implies that holders of either bet will experience either gains or losses based on the outcome by the stipulated deadline.

The platform asserts that the primary source for market resolution will be information directly from the SEC.

However, it also mentions the possibility of using a consensus of credible reporting sources to determine the market outcome.

While some members of the cryptocurrency community have criticized this betting activity, others have adopted a more humorous approach.

In a Cryptocurrency subreddit, one user referred to the bets as “putting up dollars to win dimes,” characterizing them as somewhat irrational.

Conversely, another community member humorously claimed they were about to lose their child’s college fund, while yet another apologized to their “crypto grandkids” for their impending actions.

As the crypto world watches and waits for the SEC’s decision, Polymarket’s speculative market serves as a unique reflection of the crypto community’s sentiment and willingness to take risks on significant developments in the space.

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Bitcoin Trading Expert Arthur Hayes Predicts Up to 40% Price Crash in March

Bitcoin/Crypto News Today

Arthur Hayes, a prominent figure in Bitcoin trading, has issued a warning, predicting a potential 30% to 40% crash in BTC prices in March.

In a blog post on January 4th, the former CEO of BitMEX highlighted the likelihood of a turbulent week in financial markets.

While Bitcoin enthusiasts have been optimistic due to the expected regulatory approval of the United States’ first spot Bitcoin exchange-traded funds (ETFs) and the upcoming block subsidy halving in April, Hayes believes that challenges lie ahead.

Hayes attributes his caution to the actions of the U.S. Federal Reserve, which is trying to stabilize an economy grappling with inflation and instability.

In March, the Fed’s Bank Term Funding Program (BTFP), established in response to the 2023 regional banking crisis, is set to expire. Shortly thereafter, the Federal Open Market Committee (FOMC) will decide on interest rates.

Hayes commented, “If my forecast is correct, the market will bankrupt a few banks within that period, forcing the Fed into cutting rates and announcing the resumption of the BTFP.”

Bitcoin and the broader crypto market are highly responsive to changes in macro liquidity, and a Fed bailout could aid them after an initial shock akin to the 2023 volatility.

However, Hayes believes that Bitcoin will rebound before the Fed meeting, asserting that it is the only neutral reserve hard currency not tied to the banking system, and it is traded globally.

He emphasized that Bitcoin knows the Fed always responds with liquidity injections in times of crisis.

Hayes anticipates a potential drop in BTC/USD prices ranging from 20% to 30% as March begins but believes that the upcoming halving will ultimately act as a catalyst for further price increases.

He cautiously stated that he won’t buy Bitcoin until after the critical March decision dates have passed.

The crypto community remains divided on the impact of ETF approvals. Concerns about potential rejections have already caused a nearly 10% drop in Bitcoin prices.

Some analysts argue that Bitcoin is due for a substantial correction, irrespective of ETF approval.

However, John Bollinger, the creator of the Bollinger Bands volatility indicator, predicts a positive reaction based on his tool’s readings, suggesting that Bitcoin might break higher in the near future.

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Cipher Mining Bolsters Bitcoin Mining Capacity with 16,700 New Miners Ahead of Halving Event

Bitcoin/Crypto News Today/DeFi

Cipher Mining, a prominent player in the Bitcoin mining industry, has taken a significant step towards solidifying its position by acquiring 16,700 state-of-the-art Avalon A1466 miners.

These mining machines are set to be delivered in the second quarter, strategically timed to coincide with the highly anticipated Bitcoin halving event, expected in April.

This move underscores Cipher Mining’s ambition to emerge as a key player in the industry during this pivotal moment.

The purchase agreement was brokered with Canaan, the company responsible for manufacturing the Avalon A1466 miners, and involved a joint venture between Bear LLC and Chief Mountain LLC.

Cipher Mining holds a 49% stake in this joint venture, which will see the installation of half of these miners at the Bear facility and the remaining half at the Chief facility.

This expansion will contribute an additional 30 megawatts, equivalent to 1.25 exahashes per second (EH/s), to each of these mining centers.

Upon completion of this expansion, Cipher Mining’s total self-mining capacity will reach an impressive 8.4 EH/s.

The CEO of Cipher Mining, Tyler Page, emphasized the strategic importance of this acquisition, explaining that it positions the company for substantial growth, particularly in light of the Bitcoin halving event.

Historically, this event has been accompanied by a surge in Bitcoin’s price.

Although the exact financial details of the 16,700 miner purchase were not disclosed, Cipher Mining expressed satisfaction with the favorable terms of the agreement, highlighting that the timing aligned with the market cycle for mining machines.

This isn’t the first time Cipher Mining has collaborated with Canaan. In the past, the company purchased a stack of Canaan machines, which performed admirably even in the scorching Texas summer heat, with temperatures reaching as high as 119 degrees Fahrenheit (48.3 degrees Celsius) in 2023.

In a separate transaction last year, Cipher Mining acquired 37,396 units of the latest Antminer T21 miners from Bitmain, amounting to a total investment of $99.5 million and adding 7.1 EH/s of self-mining capacity. However, delivery of these miners is expected in the first half of 2025.

Cipher Mining’s mining operations demonstrated consistent growth, with 465 BTC mined in December, marking a 7.4% increase from the previous month.

Currently, the company holds 796 BTC on its balance sheet, valued at approximately $34 million.

In terms of market performance, Cipher Mining’s share price (CIFR) experienced a remarkable rebound in 2023, surging by 638% from $0.56 to $4.13.

This impressive resurgence followed a challenging 2022 when CIFR plummeted by 88%.

With a current market capitalization of $1.01 billion, Cipher Mining is now trailing only behind Marathon Digital Holdings, Riot Platforms, CleanSpark, and Hut 8 Mining in the Bitcoin mining sector.

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Grayscale in Talks with JPMorgan and Goldman Sachs for Proposed Spot Bitcoin ETF Partnership

Bitcoin/Crypto News Today

Grayscale Investments, a prominent crypto asset manager, is reportedly engaging in discussions with notable firms such as JPMorgan and Goldman Sachs regarding potential involvement in its proposed spot Bitcoin exchange-traded fund (ETF).

According to sources familiar with the matter, Bloomberg reported this development on January 4.

These discussions have surfaced shortly after Grayscale filed an amended S-3 application with the United States Securities and Exchange Commission (SEC), which notably did not specify any authorized participants.

Simultaneously, an earlier media report has indicated that Goldman Sachs is in talks with BlackRock, aiming to assume the role of an authorized participant for BlackRock’s ETF, citing inside sources.

An authorized participant plays a pivotal role in the management of an ETF, facilitating the creation and redemption of shares within the fund.

ETF issuers can appoint multiple financial institutions as authorized participants.

Notably, ETF applicants are not obliged to disclose their authorized participants in their S-1 or S-3 filings, which implies that other financial entities may still join in the future.

While JPMorgan has already been designated as an authorized participant for several proposed spot Bitcoin ETFs, Goldman Sachs may soon join the ranks of other Wall Street giants, including Cantor Fitzgerald and Jane Street, which have previously secured authorized participant roles for other ETF issuers.

Goldman Sachs has historically maintained a neutral stance regarding cryptocurrencies and the digital asset sector.

Matthew McDermott, the Head of Digital Assets at Goldman Sachs, emphasized in a December 27 interview with Fox Business that the approval of a Bitcoin ETF would contribute to the maturation of the crypto market and attract increased institutional investment into digital assets on a broader scale.

Notably, a spot Bitcoin ETF has never received approval in the United States.

Nevertheless, experts in the ETF industry anticipate a 90% likelihood of approval before January 10.

Presently, there are 14 asset managers seeking to launch a spot Bitcoin ETF.

This development would offer institutional investors a regulated and direct avenue to gain exposure to Bitcoin within the United States.

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Polychain Capital CEO’s X Account Hacked for Phishing Scam

Crypto News Today

Polychain Capital, a prominent crypto venture capital firm, has recently confirmed a security breach affecting the X (formerly Twitter) account of its founder and CEO, Olaf Carlson-Wee.

The hacker behind the breach exploited Carlson-Wee’s account to promote phishing links disguised as a website, offering a fraudulent airdrop.

The breach was first detected on January 4, prompting Polychain to issue a public statement advising X users to refrain from engaging with Carlson-Wee’s account until further notice.

The hacker initiated the attack by posting a deceptive message on X at 8:20 pm UTC, promoting a fictitious “$PCHAIN” token airdrop.

The message encouraged followers to click a link to participate, claiming, “In celebration of the New Year, we have decided to start the $PCHAIN phase 1 distribution early!

What are you waiting for? Get your share before it’s too late!” It included a link purportedly related to Polychain.

Phishing scammers often employ such tactics to deceive users into initiating malicious transactions that can lead to the theft of cryptocurrency from their wallets.

The hacker persisted in their efforts, with approximately 41,000 X users having seen the initial fraudulent post at the time of writing.

This incident adds to the growing list of cryptocurrency-related phishing scams, with a recent report by security platform Scam Sniffer revealing that such scams victimized 324,000 individuals and resulted in losses totaling nearly $300 million in 2023 alone.

Unfortunately, this is not the first time that prominent figures in the crypto space have fallen victim to similar attacks.

Ethereum co-founder Vitalik Buterin had his X account compromised in September, where the hacker managed to siphon $691,000 from victims who clicked on a malicious link that falsely promised a free nonfungible token.

Moreover, other venture capital firms like Blockchain Capital and decentralized finance protocol Compound Finance also experienced similar security breaches in August and December.

These incidents involved luring users with promises of token claims.

Polychain Capital, headquartered in San Francisco, specializes in managing actively managed portfolios of various blockchain assets.

Established in 2016, the firm had amassed $2.6 billion in assets under management as of July 2023.

The breach of Olaf Carlson-Wee’s X account serves as a reminder of the ongoing challenges posed by cyber threats in the cryptocurrency industry, emphasizing the need for robust security measures and vigilant user awareness.

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Bitcoin ETF Approval Speculation Fuels Social Media Frenzy

Bitcoin/Crypto News Today

Speculation regarding the approval of a Bitcoin exchange-traded fund (ETF) by the SEC has surged on social media, with anticipation mounting for a potential announcement on Friday.

Fueling these expectations, a tweet from Grayscale’s legal chief mentioning that he was “just filling out some forms,” along with a widely shared tweet from a reporter, has intensified the speculation of an imminent approval.

While some analysts foresee the possibility of approvals as soon as the next day, others suggest that we might have to wait until the following week.

TechCrunch reporter Jacquelyn Melinek, in a January 4th post on X (formerly Twitter), cited sources “extremely close to the matter” and indicated that she was “expecting something tomorrow,” hinting at the potential approval of multiple ETFs.

One tweet that has caught the attention of many is from Grayscale’s chief legal officer, who cryptically mentioned that he was “just filling out some forms.”

This tweet has garnered significant attention with 1.9 million views and 6,700 likes since its posting.

Social media is buzzing with the hashtag #BTCETF and discussions around “Bitcoin ETFs,” while the price of Bitcoin has also experienced an uptick of 3.4% in the last 24 hours, following a sharp drop on January 3rd, according to TradingView data.

However, not everyone is convinced of an immediate approval. Trader Scott Melkor acknowledges the vigorous rumor mill but remains cautious.

Bloomberg ETF analyst James Seyffart views much of the January 5th approval speculation as noise and anticipates approval to arrive between January 8th and 10th.

Attorney Joe Carlasare points out that the public comment period for several ETF applications extends until midnight on January 5th, making it “very unlikely” for approval to occur before the start of the next week in his view.

Eric Balchunas, senior Bloomberg ETF analyst, reveals that the SEC is in the process of providing final comments, and issuers are expected to file their final 19b-4 and S-1 forms soon.

Both forms must gain SEC approval before the ETF can commence trading, with the 19b-4 form being particularly crucial for the spot Bitcoin ETF’s effective approval.

Scott Johnsson, general partner at VB Capital, remains skeptical about an ETF approval before the next week, unless all 19b-4 applications are already clear and the SEC is open to simultaneous approvals.

Currently, 14 issuers are competing for the approval of a Bitcoin ETF, including BlackRock, Valkyrie, ARK Invest/21 Shares, Bitwise, and Fidelity.

Investors and enthusiasts alike eagerly await the SEC’s decision, which could have a significant impact on the cryptocurrency market.

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Spain’s Banco de España Partners with Cecabank, Abanca, and Adhara Blockchain for CBDC Testing

Crypto News Today

Spain’s central bank, Banco de España, has recently announced its selection of collaborators for its central bank digital currency (CBDC) experiments, following an open call for partners issued a year ago.

On January 3rd, Banco de España revealed its partnership with three key players: Cecabank, Abanca, and Adhara Blockchain.

Over the next six months, these partners will engage in a pilot program to test the wholesale CBDC, which will include simulating the processing and settlement of interbank payments using a tokenized wholesale CBDC.

Additionally, they will explore exchanging various wholesale CBDCs issued by different central banks.

Part of this experimental journey will involve utilizing the wholesale CBDC to settle a simulated tokenized bond, a significant step in the development and application of CBDC technology.

From the 24 applications received by Banco de España over the past year, these three companies were selected as collaborators.

Notably, while Cecabank and Abanca are Spanish entities, Adhara Blockchain is headquartered in the United Kingdom, showcasing the international interest in CBDC development.

It’s worth highlighting that Spain’s CBDC program is distinct in that it operates independently from the digital euro project, which would encompass all eurozone economies if implemented.

Meanwhile, the Spanish Ministry of Economic Affairs and Digital Transformation has committed to implementing the European Union’s Markets in Crypto-Assets Regulation six months ahead of the deadline, underlining the nation’s proactive stance in regulating the crypto sector.

In a move to educate the public about the digital euro, the Bank of Spain had previously published materials explaining its nature and potential applications.

Despite these efforts, a survey conducted in October revealed that the majority of Spaniards, approximately 65% of respondents, showed little interest in using the digital euro alongside their regular payment methods.

This indicates that while the central bank is advancing in CBDC experimentation, widespread adoption may still face some hurdles in the Spanish market.

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Spot Bitcoin ETF Approval Opens Doors for Institutional and Retail Investors

Bitcoin/Crypto News Today

The Chicago Board Options Exchange (CBOE), America’s largest options exchange, anticipates that spot Bitcoin exchange-traded funds (ETFs) will usher in a fresh wave of institutional investors.

In a recent interview on Bloomberg TV, CBOE Digital President John Palmer articulated that the approval of such ETFs would not only facilitate greater institutional participation but also stimulate retail interest in Bitcoin derivatives.

Palmer emphasized that this approval could potentially pave the way for pension funds and RIA-based (Registered Investment Advisor) funds to directly invest in spot Bitcoin ETF assets.

Currently, many of these funds face limitations in gaining direct exposure to Bitcoin. He further explained that RIAs are entities registered with federal or state regulatory agencies, specializing in offering investment advice.

As the deadline for the Securities and Exchange Commission (SEC) to decide on the ARK Invest 21 Shares Bitcoin ETF application approaches on January 10, Palmer believes that if approved, Bitcoin derivative products will experience significant expansion.

Institutional players are expected to increasingly utilize these derivatives for risk management purposes.

Palmer acknowledged the difficulty in predicting the exact breakdown of investors but noted that institutions are at the forefront of accessing hedging tools.

Nevertheless, he expects retail investors to also show interest in these instruments.

CBOE Digital, the cryptocurrency division of the exchange, currently offers crypto futures and options trading.

On January 11, it plans to launch margined Bitcoin and Ether derivatives trading, allowing investors to trade these contracts without the requirement of providing the full collateral.

Simultaneously, some mutual funds are already strategizing to increase their exposure to spot Bitcoin ETFs upon approval.

On January 2, Advisors Preferred Trust, a mutual fund manager, modified its prospectus to allow the fund to invest up to 15% of its total assets indirectly in Bitcoin.

This exposure would be achieved through investments in shares of Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts.

In conclusion, the potential approval of spot Bitcoin ETFs is poised to reshape the landscape of institutional and retail investments in cryptocurrencies, providing greater accessibility and hedging opportunities for a broader range of investors.

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