BTC ETFs Return to Inflows, BitGo Aims to Enter Stablecoin Arena

• Bitcoin ETFs return to healthy net inflows, but ether ETFs continue to struggle
• BNB Chain announces major update for stablecoin infrastructure
• BitGo to enter stablecoin market with reward-bearing USDS Coin

Bitcoin drove crypto weekly gains, BTC ETFs see inflows, ETH ETFs struggle

Crypto markets mirrored TradFi risk assets this week, with the total market cap of the crypto space posting a 4.4% weekly gain, driven by bitcoin as its dominance crossed 57%. Among large caps, bitcoin rallied 7.5% from the previous week, while ether saw modest gains of 1.3%. In the US-listed spot-only ETF market, bitcoin ETFs experienced cumulative net inflows of $449.1 million over the last 5 trading days, primarily benefiting Fidelity, Ark, and Bitwise. However, ether ETFs continued to face outflows, with cumulative net losses totaling $52.9 million during the same period.

The ETH/BTC ratio has dropped to its lowest point since April 2021, falling below 0.04, indicating waning investor interest in ether relative to bitcoin. While bitcoin reached a new all-time high earlier this year, ether has yet to surpass its 2021 peak. Year-to-date, bitcoin has returned over 45% to investors, while ether has gained just under 4% (not taking in account the staked rewards), prompting memes that even holding T-Bills has outperformed ETH this year. Additionally, the 7-day moving average of daily staker revenue on Ethereum fell to $5.44 million last Thursday, its lowest level since mid-February. This drop suggests stakers are earning less from network participation, likely due to lower activity, fewer transaction fees, rising competition, and increased focus on Layer 2 solutions.

BNB posted a weekly gain of 5.4%, driven by new developments on BNB Chain aimed at becoming the core infrastructure for stablecoin payments and digital financial transactions. As part of its broader mission to bridge the gap between Web2 and Web3, BNB Chain seeks to make cryptocurrency as practical for daily transactions as traditional money, reinforcing its commitment to onboarding the next billion Web3 users. The chain is focusing on making stablecoin payments faster, cheaper, and more accessible by enabling gasless transactions across centralized exchanges (CEXs), wallets, and bridges. Through partnerships with leading payment providers, gas-free transfers of USDT, USDC, and FDUSD will be supported.

BitGo aims to shake up the stablecoin market with rewards for liquidity

According to a report from Coindesk, fintech giant Revolut is looking to expand its crypto offerings by launching its own stablecoin. The company, which secured a UK banking license in July and was valued at $45 billion earlier this year, is reportedly well advanced in the development of the stablecoin. The lucrative stablecoin market, currently led by Tether’s USDT with a market cap of around $119 billion, has seen a surge of new entrants. Circle’s USDC ranks second, with a market cap about a third the size of USDT.

Tether reported $5.2 billion in net profits for the first half of the year, as the market cap of its USDT surged to new all-time highs. The company announced that it generated $1.3 billion in net operating profits during the second quarter alone. Tether's US debt holdings reached $97.6 billion, which the company noted would rank 18th globally, surpassing countries like Germany, the UAE, and Australia.

Last year, PayPal entered the stablecoin space, and now blockchain firms Ripple and BitGo are set to follow. Ripple plans to launch in the coming weeks, while BitGo announced its stablecoin, USDS, at Token2049 in Singapore. Like other stablecoins, USDS will be backed by short-duration Treasury bills, overnight repos, and cash. BitGo, however, touts USDS as the first open-participation stablecoin and distinguishes itself with a rewards-based model. This approach incentivizes institutions to provide liquidity by distributing a portion of the returns generated from its reserves. BitGo aims to list USDS on all major exchanges and is targeting $10 billion in assets held within the stablecoin by next year.

Macro pulse 

Among TradFi risk assets, oil futures rallied 4.9% compared to the previous week, largely driven by the ongoing impact of Hurricane Francine on output. US equities also rose by 1.2% during the same period. The Fed opted for a 50 bps rate cut, with the dot plot indicating an additional 50 bps reduction expected later this year. Chair Powell emphasized flexibility, stating they could accelerate, slow down, or pause rate cuts depending on evolving conditions, with decisions made on a meeting-by-meeting basis. He also cautioned against viewing this move as the new norm. Meanwhile, the US Dollar Index slipped by 60 bps, 10-year US Treasury yields rose by 5 bps, and the Gold & Silver Index rallied by 5.3% week-on-week.

^{*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on September 19 , 2024} 

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