Lackluster Price Action, but ETF Inflows Surge, MSTR to join NDX?

• ‍BTC ETFs saw $2.28B in inflows, ETH ETFs $1.07B in 5 days
• SEC seeks feedback on Bitwise bitcoin and ether ETF proposal
• Japanese crypto exchange Coincheck lists publicly in the US

Alts in the red, BTC holds steady, and ETF inflows keep soaring

Crypto markets had a mixed week, with altcoins trading in the red while bitcoin extended its upward momentum. The total crypto market cap remained above $3.4 trillion, and bitcoin’s dominance climbed to over 55.5%. Among the blue-chips, bitcoin gained 2.4% week on week, whereas ether saw a slight dip of 0.2%. Despite the relatively flat price action, US spot ETFs continued to attract strong inflows. BTC ETFs recorded a cumulative net inflow of $2.28 billion over the past 5 trading days, while ETH ETFs saw $1.07 billion.

US regulators are now seeking public input on NYSE Arca’s proposal to list a new Bitwise ETF that would include both bitcoin and ether, as noted in a December 10 filing. Bitwise and NYSE had initially submitted their application to the Securities and Exchange Commission (SEC) on November 26. The filing indicates that the SEC has advanced the application to the next phase by requesting comments from the industry. On November 27, NYSE proposed listing another Bitwise product, the Bitwise 10 Crypto Index Fund, which aims to include a broader selection of digital assets. Similarly, NYSE Arca submitted a filing on October 29 requesting approval for the Grayscale Digital Large Cap Fund, an index ETF. Asset managers like Hashdex and Franklin Templeton have also introduced competing crypto fund proposals, intensifying the race to bring diversified crypto investment products to market.

Meanwhile, the regulatory landscape could face shifts with changes in SEC leadership. SEC Chair Gary Gensler, who has been at the forefront of the agency’s assertive crypto enforcement since 2021, announced plans to step down once Donald Trump’s presidential term begins. Under Gensler, the SEC launched over 100 actions against crypto firms, signaling a stringent regulatory approach. With Trump set to take office, ETF issuers are ramping up efforts to introduce products ranging from index-based funds to staking-focused offerings.

Coincheck rings Nasdaq bell, HK to fast-track licensing, MSTR to join NDX?

Coincheck, Japan's second-largest cryptocurrency exchange, debuted on Nasdaq this week through a $1.3 billion merger with Thunder Bridge Capital. The de-SPAC deal positions Coincheck as the second crypto exchange to go public in the US, aiming to attract global investors, recruit top talent, and accelerate international expansion. Operating as a subsidiary of Monex Group since 2018, the exchange overcame challenges like stricter regulations after a historic hack. Trading under the ticker CNCK, Coincheck plans to leverage bitcoin's recent rally and growing institutional interest in crypto. The deal was backed by advisors including Barclays and J.P. Morgan.

Hong Kong is taking steps to bolster its role in the crypto industry by accelerating the licensing process for crypto trading platforms. Acting Secretary for Financial Services and the Treasury, Joseph Chan, revealed plans for a faster licensing process and a consultative panel for licensed platforms, set to launch early next year. Since implementing a crypto licensing regime in June 2023, the region has granted licenses to platforms like OSL Exchange, HashKey Exchange, and HKVAX, enabling them to offer retail trading services. Beyond trading, Hong Kong is also expanding its regulatory oversight. A legislative bill is expected this month to require fiat-referenced stablecoin issuers to obtain licenses from the Hong Kong Monetary Authority. Additionally, authorities plan to introduce licensing regulations for crypto custodians next year, signaling an effort to establish a more regulated environment rather than a hub for the industry.

Analysts at Bernstein believe the momentum for MicroStrategy will persist, driven by its anticipated inclusion in the Nasdaq 100 index later this month and the growing focus on crypto under the incoming Trump administration. Bloomberg analyst James Seyffart projected that MicroStrategy will likely be added to the Nasdaq 100 on December 23, with an announcement possibly coming as early as this Friday. Following this inclusion, ETFs are expected to buy at least $2.1 billion in shares, representing roughly 20% of daily trading volume, a figure Seyffart considers conservative. Eric Balchunas, another Bloomberg ETF analyst, suggested that Moderna would likely be removed from the index, with MicroStrategy taking on a 0.47% weight in the Nasdaq 100. This move highlights the increasing role of crypto-focused stocks in major market indices.

Macro pulse 

Among TradFi risk assets, Oil futures climbed 2.6% over the past week, while US equities remained flat. The standout event was the US CPI report, which solidified expectations for a 25 bps rate cut by the Fed next week. November's inflation data matched forecasts across all key metrics, with the Consumer Price Index showing a 12-month inflation rate of 2.7% following a 0.3% monthly rise. The CME Group’s FedWatch tool reflects a 98.6% probability of this anticipated rate cut. Meanwhile, the US Dollar Index edged up 0.4%, the 10-year US Treasury yield increased by 9 bps, and the Gold & Silver Index surged 3.8% week on week.

*^{Note: Weekly (7 calendar day) performance figures are as of 8am SGT on December 12, 2024} 

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