Mixed Week: Mt Gox Supply Hits the Market, and Funds in the Chain

• New spot ether ETFs see $1 billion in trading volume on first day
• Hashdex files S-1 for an ETF that holds bitcoin and ether
• Libre introduces access to Hamilton Lane’s SCOPE on Solana

Crypto’s mixed week, Solana surges and Mt Gox supply hits the market

The crypto markets experienced a rally in the first half of the week before giving up the majority of those gains in the latter half. The total market cap of the crypto universe approached $2.4 trillion, with bitcoin's dominance rising to 54.5%. Among the major cryptocurrencies, bitcoin rose by 2% compared to the previous week, while Ether saw a weekly decline of 1.5%.  Solana led the pack with a standout 14.4% rally week over week. This surge is likely due to increased transactional activity and growing speculation about a potential exchange-traded fund (ETF) product. According to data from DefiLlama, the total value locked (TVL) in Solana’s tokens has risen over 25% in the past month, surpassing $5.28 billion—a level not seen since April 2022. Since June, the network has consistently generated at least $1.5 million in daily revenue and has achieved over $2 billion in on-chain trading volumes each day for the past week.

This week US-listed spot bitcoin ETFs experienced daily inflows exceeding $400 million for a couple of days, followed by smaller inflows and a day of outflows, ending a 12-day streak of daily inflows. Spot ether ETFs debuted on Tuesday with $106.6 million in inflows, followed by $133.3 million the next day as the markets sold off. BlackRock’s iShares Bitcoin Trust ETF has attracted over $19.5 billion in net daily inflows. Jeroen Blockland, founder of Blockland Smart Asset Fund, noted in an X post that these inflows surpass those of the “magnificent seven” stocks in 2024.

Meanwhile, the nine spot ether ETFs that launched on Tuesday fell around 1% after their first trading day, with a collective trading volume of just over $1 billion. The Grayscale Ethereum Trust saw the highest activity and held more than $9 billion worth of Ether before its conversion to an ETF. On Wednesday, Hashdex filed its registration statement (S-1) with the U.S. Securities and Exchange Commission for the Hashdex Nasdaq Crypto Index US ETF, which will include bitcoin and ether initially, with the possibility of adding more assets as regulations evolve. Hashdex opted not to pursue a spot ether ETF, likely preferring to create a more unique index-based crypto ETF in the U.S. rather than competing with established single-asset ETFs.

The bankrupt bitcoin exchange Mt. Gox transferred a new batch of BTC to fresh wallets on Wednesday. After the transfer, Mt. Gox held $6 billion worth of BTC, down from $9 billion on July 10. These movements were similar to those on Tuesday, when Mt. Gox moved $130 million to Bitstamp and shuffled $2.5 billion between wallets. Additionally, several creditors on the crypto exchange Kraken reported receiving bitcoin repayments for the first time this week. Bitstamp confirmed that it received bitcoin and will start the process of returning digital assets to Mt. Gox creditors on Thursday. Around 20,000 former Mt. Gox users are set to receive over $9 billion in total repayments as part of the restitution process.

Funds on the chain, from Ethereum to Solana

The trend for tokenizing existing financial assets continues to grow, more and more asset managers are exploring tokenization to expand fund distribution. Libre, a tokenization-focused startup and joint venture between hedge fund Brevan Howard’s WebN Group and financial services giant Nomura’s Laser Digital, is adding a bevy of blockchain-based funds to the Solana network, including the debut of a Hamilton Lane credit fund. Adding the company's tokenization gateway to the Solana blockchain will, for the first time, give users access to the on-chain Hamilton Lane SCOPE fund as well as the Brevan Howard Master Fund and Blackrock ICS Money Market Fund, Libre said in a press release. The move beyond Ethereum-compatible chains marks the first institutional alternative RWA fund to appear on Solana.

According to a CoinDesk report, Coinbase's asset management division is developing a tokenized money-market fund. This move marks the expansion of Coinbase Asset Management's efforts to enter the tokenization space. In December, the company received preliminary approval from an Abu Dhabi regulator to begin tokenizing traditional assets on Base, the exchange's Ethereum scaling network. Additionally, in March 2023, Coinbase acquired One River Digital Asset Management, which led to the establishment of Coinbase Asset Management.

Google search volume for the term "onchain" has surged to unprecedented levels, indicating a significant rise in mainstream interest in blockchain technologies. The search interest score has soared fivefold, climbing from approximately 19 at the beginning of 2024 to a peak of 100 in recent weeks, setting a new all-time high. This trend aligns closely with the increase in decentralized exchange volumes relative to centralized exchanges. Additionally, Coinbase's recent promotion of "onchain summer" might have been one of the potential drivers for the surge in volumes as well.

Macro pulse 

TradFi assets saw a risk off tone this week. U.S. equities dropped by 2.9% compared to the previous week, while oil futures tumbled by 6.3%, largely due to ongoing concerns about demand from China. Yesterday, U.S. stocks faced their steepest decline since late 2022, driven by disappointing earnings reports and mixed economic data, including an unexpected contraction in the Manufacturing PMI. Elsewhere, the US Dollar index rose up by 60 bps and the 10 year U.S. Treasury yield climbed 12 bps week on week while the Gold & Silver index fell by 3.4%.

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*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on July 25, 2024 

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