IBIT Smashes Previous Inflow Highs, MSTR Wants Moar, COIN Misses the Mark

• IBIT sets record with $875 million single day inflow
• MicroStrategy plans $42 billion bitcoin investment
• Coinbase launches $1 billion share repurchase program

BTC led crypto rally, IBIT makes a new record, MSTR wants moar

Crypto markets saw a strong rally this week driven by bitcoin, pushing the total crypto market cap up by 6.1% and bringing bitcoin dominance close to 59%. Among large caps, bitcoin rose 8.9%, while ether gained 5.9% over the past week. In the US-listed spot ETF space, ether ETFs recorded $6 million in net outflows over the past five trading days, while bitcoin ETFs amassed an impressive $2.8 billion in cumulative daily inflows. The BlackRock iShares Bitcoin Trust (IBIT) set a new record on October 30, 2024, with $872 million in inflows, the highest daily amount since its January launch, bringing its total net inflows close to $26 billion. Remarkably, IBIT now ranks fourth in lifetime inflows among nearly 2,100 ETFs launched in the past five years—a milestone achieved in under 10 months.

Among publicly listed companies with significant BTC holdings, MicroStrategy has doubled down on its commitment to bitcoin. Although the firm hasn’t added to its bitcoin stash since September, it recently announced an ambitious plan to raise $42 billion over the next three years to support further acquisitions. In its Q3 earnings release, MicroStrategy outlined a plan to split this capital raise evenly, with $21 billion coming from equity and $21 billion from debt. Additionally, the company raised its target for “BTC Yield”—a key performance indicator established by CEO Michael Saylor and his team—aiming for an annual yield of 6% - 10% from 2025 - 2027. Year-to-date, the company’s “BTC Yield” stands at 17.8%. In its latest purchase announcement, MicroStrategy acquired 7,420 BTC for $458.2 million, bringing its total holdings to 252,220 BTC at an average cost of $39,266 each. With bitcoin trading around $72,000 at the time of writing, the company’s holdings are now valued at over $18 billion.

Among altcoins, Chainlink surged 10.2% week-on-week following Wednesday's announcement of the Chainlink Runtime Environment (CRE), a development suite designed to facilitate cross-chain application building. Chainlink describes CRE as a streamlined environment for blockchain applications, comparable to how JRE advanced Java development by offering a single, adaptable framework. With a focus on modularity and privacy, CRE enables developers to create scalable, privacy-focused workflows by leveraging specialized Decentralized Oracle Networks (DONs). Each DON serves a distinct purpose—such as reading or writing data—operating independently yet seamlessly to support complex financial workflows on-chain.

Privacy in CRE is reinforced through advanced cryptographic methods, including zero-knowledge proofs (ZKPs) and Trusted Execution Environments (TEEs), allowing for secure data handling across multiple chains. For instance, CRE can direct sensitive blockchain events into confidential computing instances that process data without public exposure. The output, delivered as a verified zero-knowledge proof, ensures data integrity and privacy while only revealing necessary results.

Asia's steady push for crypto regulation, COIN's Q3 earnings underwhelm

Asia is making strides in regulatory adoption for crypto assets. Crypto exchange Gemini and financial services platform Matrixport recently announced they received preliminary approval for the Major Payment Institution (MPI) license in Singapore. Meanwhile, Hong Kong Exchanges and Clearing (HKEX) unveiled a new digital asset index series aimed at providing accurate real-time data on digital assets in the Asia-Pacific region. The HKEX Virtual Asset Index Series is set to launch on November 15, 2024, offering investors benchmarks for bitcoin and ether pricing tailored to the Asian time zone.

In addition to the HKEX index, the Securities and Futures Commission (SFC) is finalizing full licenses for several crypto exchanges that previously held provisional permits. After a five-month inspection period, the regulator identified some unsatisfactory practices among certain firms but noted that most have since taken corrective actions. By early 2025, the SFC plans to establish a consultative panel with licensed exchanges to enhance cooperation and compliance. This expansion of the regulatory framework will also encompass over-the-counter trading desks and custodians, strengthening oversight of Hong Kong's digital asset markets.

Coinbase's third-quarter earnings and revenue fell short of Wall Street expectations on Wednesday, causing shares to drop in after-hours trading. The crypto exchange reported total revenue of $1.2 billion, below the average estimate of $1.26 billion. Earnings per share came in at $0.28, missing the forecast of $0.45. Additionally, Coinbase's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $449 million was lower than the anticipated $469.2 million.

In a shareholder letter, the firm attributed its performance to challenging market conditions, although it noted growth in certain areas. In October, Coinbase authorized a share buyback of up to $1 billion, stating that repurchases would be made at its discretion without any obligation to buy back a specific amount or number of shares, and the program could be adjusted or halted at any time. The company emphasized its strong balance sheet, ending the third quarter with $8.2 billion in cash, cash equivalents, and USDC, an increase of $417 million from the prior quarter.

Transaction fees are Coinbase’s primary revenue source, they dropped by 27% from the second quarter due to a decline in trading volume across US-based exchanges. The letter noted that "crypto asset volatility—a key driver of trading volume—declined approximately 5% when comparing the average for Q3 with that of Q2."

Despite ongoing regulatory challenges in the US, Coinbase has launched several new initiatives this year, including a recent feature that enables Visa debit card holders to transfer funds to their Coinbase accounts almost instantly. To diversify its revenue streams and reduce dependence on high trading volumes, the exchange is also focusing on expanding its custody services and participating in the tokenization of real-world assets.

Macro pulse 

Oil futures slid 3.1% this week, while US equities gained a modest 0.3%, with markets weighing earnings and mixed economic indicators. GDP growth fell short of expectations, but a stronger Core PCE and a rise in ADP employment caught attention. Focus now shifts to Thursday’s PCE inflation report and Friday’s NFP release. Elsewhere, the US Dollar Index dipped by 40 bps, 10-year Treasury yields nudged up 2 bps, and the Gold and Silver index declined 3.5% week over week.

^{*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on October 31, 2024} 

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