BlackRock, the world’s largest asset manager, has announced it is launching a blockchain exchange-traded fund (ETF).
The new product will track companies involved in the development and use of blockchain technology.
This news comes as no surprise, as interest in blockchain technology continues to grow. Many believe that blockchain has the potential to revolutionize how we interact with the internet and conduct business.
While still in its early stages, blockchain technology is already being used in a variety of ways, including in the financial sector.
BlackRock’s decision to launch a blockchain ETF shows that it believes there is potential for this technology to grow and become mainstream.
This could mean good things for the future of blockchain. With a major player like BlackRock behind it, blockchain could become more widely accepted and used in the years to come.
What is BlackRock and what does it do
BlackRock is a global investment management company with more than $6 trillion in assets under management. It offers a range of products and services, including mutual funds, exchange-traded funds (ETFs), hedge funds, and separate accounts.
BlackRock also provides investment advisory and risk management services to institutional investors and financial intermediaries. The company has more than 13,000 employees and offices around the world.
Why BlackRock is launching a blockchain ETF
BlackRock is launching a blockchain ETF in order to capitalize on the growing interest in the technology. The fund will track companies that are involved in the development and use of blockchain technology, which is expected to become a key part of the global economy in the coming years.
With the launch of this ETF, BlackRock is hoping to give investors exposure to the potential of blockchain technology while mitigating some of the risks associated with investing in individual stocks. The fund provides a way for investors to gain exposure to the blockchain space without having to put all their eggs in one basket.
In recent years, there has been an explosion of interest in blockchain technology. While still in its early stages, many experts believe that blockchain has the potential to become one of the key technologies driving economic growth in the years ahead.
The benefits of investing in a blockchain ETF
First, by investing in a blockchain ETF, investors can gain exposure to a broad range of companies that are involved in the blockchain space. This allows investors to diversify their risk and exposure to the technology.
Second, a blockchain ETF provides investors with a way to get exposure to the technology without having to put all their eggs in one basket. This is important because blockchain is still in its early stages and there is a lot of uncertainty surrounding the space.
Lastly, a blockchain ETF gives investors access to professional management. This is important because it can be difficult for individual investors to keep track of all the companies involved in the blockchain space.
BlackRock’s launch of a blockchain ETF is a big step forward for the technology. The ETF provides a way for investors to get exposure to the potential of blockchain while mitigating some of the risks associated with investing in individual stocks.
This is a key development that will help to drive the mass adoption of blockchain technology in the years ahead.
Investing in a blockchain ETF is a smart way to gain exposure to the potential of this transformational technology. With BlackRock’s launch of the first ever blockchain ETF, investors now have an easy way to get started investing in this space.
The risks associated with investing in a blockchain ETF
When it comes to investing in a blockchain ETF, there are a few key risks to be aware of.
Like any other investment vehicle, there is the risk of losing money when investing in a blockchain ETF. This is especially true in the early stages of the technology when there is a lot of uncertainty surrounding the space.
A blockchain ETF is subject to the same volatility as the underlying blockchain assets. This means that the value of the ETF can go up and down in value rapidly.
Lastly, a blockchain ETF may be less liquid than other investment vehicles. This means that it may be difficult to sell your shares in the ETF if you need to cash out in a hurry.
Coinbase Making Headlines For All The Wrong Reasons
Two weeks after cutting 18% of its workforce, Coinbase (NASDAQ:COIN) is back in the news. Twelve days earlier, they’d emailed new hires one of the cruelest HR mass emails I’d ever seen: “Just kidding! Our hiring freeze affects your offer!” (The “Chief People Officer” promised severance.)
Again, Coinbase is in the wrong limelight.
Even after the job layoffs, “we believe Coinbase will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up,” said Will Nance, VP and head analyst for Payments and Digital Assets at Goldman Sachs. It’s a bit rich to switch from “Neutral” to “Sell” when the stock plunged -75% in three months. If you weren’t committed to COIN long-term, the Super Bowl was a good moment to sell.
The financial outlook for Coinbase
Q1 was rough for crypto-trading platforms like Coinbase. Assets on Platform rose 15% year-over-year, while Verified Users rose 81%. These customers provided half the average transaction revenue they had in 2021. Coinbase’s revenues plummeted -27% and EBITDA fell -98% year-over-year. Comparing 2022 numbers is even harder. Coinbase grew from $1.1 billion in 2020 to $7.3 billion in 2021. Goldman expects $2.9 billion in 2022, a 60% reduction.
Moody’s also weighed in. Moody’s lowered Coinbase’s debt rating from “Ba2” to “Ba3” for similar reasons as Goldman. Both are “junk bonds” or “non-investment-grade”. Interactive Brokers (NASDAQ:IBKR) is rated A- by S&P Global as of June 16. Interactive Brokers’ Q1 revenue fell 27%. Its EBITDA fell -37% year-over-year, less than Coinbase. Interactive Brokers “has navigated the ‘zero commission’ trend,” S&P comments:
“Unlike its competitors, IBG offers customers both its traditional low-commission pricing option and a zero-commission option that includes revenue-increasing measures (such as higher rates on margin loans) to offset the reduction in commissions.”
Coinbase charges 4%. IBKR, a “blue-chip, diversified, long-standing broker with high-quality clientele,” trades at a greater valuation even in current down market, Seeking Alpha says. Interactive Brokers’ revenue is expected to climb 12% this year, not decline 60%.
Coinbase is experimenting
If users aren’t interested in typical trades… Derivatives? They’re popular:
Carnegie Mellon University found in 2021 that crypto derivatives have five times the “spot” market’s volume. Over $100 billion in derivatives are exchanged daily, rivaling the New York Stock Exchange. This month, Coinbase releases “Nano Bitcoin Futures.” Since January, Coinbase has worked on derivatives. At 1/100th of a Bitcoin, Coinbase’s Nano Bitcoin Futures contract “needs less initial money than standard futures products”
Bitcoin “perpetual futures” at FTX (FTT-USD) cost $20,000 Coinbase’s trading volume has been stable in the bear market compared to the 2021 bull. Coinbase will close Coinbase Pro to reduce fees. If you switched between Pro and normal, you paid less. (How clever!) Advance Trade will replace Pro in the main Coinbase app, CoinMarketCap says, with the same volume-based fees.
The Goldman analyst who just downgraded COIN doesn’t like the “fee reduction” this could produce. Coinbase already struggles to maintain positive EBITDA, even with 81% more users in Q1 year-over-year.
Coinbase has a greater issue
Inflation is one opponent trading platforms can’t do much to battle. Retailers may need to lower prices to attract customers. Home prices remain high. And rental prices soar! A published report on Monday stated that 58% of Americans live paycheck to paycheck as inflation spiked, including 30% of those earning $250,000 or more. How many Americans will trade their wages on a crypto app?
Coinbase is considered more institutional than Binance (BNB-USD). Most Platform Assets and Trading Volume are institutional. In Q1, 95% of Coinbase’s Transaction Revenue came from the Retail division. 87 percent of its revenue came from transactions. (Coinbase’s Advance Trade feature could mean retail traders pay less than big traders.) (Hope they like Nano Bitcoin Futures.)
Inflation will be reduced soon. Some analyst don’t foresee red-hot inflation or stagflation. They predict BTC will settle around $20,000 in six months. Coinbase and investors must wait for relief.
Three Arrows Capital Defaulted on a $670M Debt
One of the most well-known crypto hedge funds, Three Arrows Capital, has defaulted on a $670 million debt. Voyager Digital, a digital asset brokerage, announced on Monday that the fund had defaulted on a $350 million USDC and 15,250 bitcoin loan, valued around $323 million at today’s rates.
In the wake of weeks of turbulence in the cryptocurrency market, 3AC is facing a financial constraint that could lead to bankruptcy. In the previous 24 hours, both bitcoin and ether have fallen marginally, although both are still considerably below their all-time highs. In the meantime, the total crypto market cap is roughly $950 billion, down from around $3 trillion in November 2021 at its high.
In a statement, Voyager stated that it wants to pursue 3AC recovery (Three Arrows Capital). Customers’ orders and withdrawals are still being processed, despite the broker’s statement that the platform has been shut down. It’s possible that the assurance is an attempt to tamp down fears of a wider crypto environment spreading the disease.
Voyager CEO Stephen Ehrlich said, “We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands.” According to Voyager, it has $137 million in US currency and crypto assets as of Friday. In addition, Alameda Ventures has provided the company with a $318 million (or 15,000 bitcoins) revolver, worth $200 million in cash and USDC.
Sam Bankman-Fried, the creator of FXTrade, has invested $500 million in the crypto brokerage Voyager Digital. 75 million dollars of its credit line have already been drained by Voyager. 3AC’s default “does not cause a default in the agreement with Alameda,” according to the statement. 3AC did not respond to a request for comment from CNBC right away.
What brought 3AC to this point?
Zhu Su and Kyle Davies started Three Arrows Capital in 2012. One of Zhu’s most well-known traits is his belief that bitcoin will continue to rise in value. Last year, he predicted that the world’s most valuable cryptocurrency might be worth $2.5 million per coin, according to his calculations at the time. Zhu’s “supercycle price thesis” was, however, proven to be incorrect in May of this year, when the crypto market began its downward spiral.
The so-called “crypto winter” has taken a toll on digital currency initiatives and businesses of all kinds. This month, Zhu tweeted that the company was in the midst of “communicating with relevant parties” and “totally committed to sorting this out,” which sparked the company’s troubles. There was no further investigation into the nature of the problems.
After the tweet, the Financial Times reported, citing persons familiar with the subject, that US-based crypto lenders BlockFi and Genesis had liquidated some of 3AC’s positions. While 3AC had borrowed money from BlockFi in order to pay the margin call, they were unable to do so.
To avoid a loss on a trade done with borrowed money, an investor must put more money into the account. There were two tokens that had been touted as “algorithmic stablecoins”: TerraUSD and Luna. 3AC’s exposure to Luna resulted in financial losses. Founder of 3AC, Davies, told the Wall Street Journal, “The Terra-Luna scenario caught us very much off a surprise.
Because of the ongoing downward pressure on bitcoin prices, Three Arrows Capital is still in a credit crunch. On Monday, Bitcoin was trading about $21,000, a loss of about 53% from its year-to-date high. As a result of rising inflationary pressures, the Federal Reserve in the United States has suggested that it will raise interest rates in the near future.
According to Forbes, 3AC, one of the world’s leading digital asset hedge funds, borrowed enormous amounts of money and invested in numerous digital asset ventures. Fears of a further industry-wide outbreak have been prompted by this.
As a result of the market fall, a number of crypto businesses have already experienced liquidity issues. As a result of “extreme market conditions,” Celsius, a loan service that promised customers significant returns for depositing their digital currency, has put an end to customer withdrawals. Babel Finance, another crypto lender, announced this month that it has blocked withdrawals due to “unusual liquidity pressures.”
Is 400 Trillion SHIB Tokens Burned Enough For a Bull Run?
On April 23rd, the Shiba Inu Ecosystem announced the establishment of a “burning gateway,” through which it will begin the process of burning SHIB tokens. According to a blog post that was written by the people in charge of developing the Shiba Inu project, the purpose of burning SHIB is to lower the number of tokens that are currently in circulation. As a result, the developers hope to create a scarcity that would cause the price to increase.
The developers mentioned that in order to incentivize the participants of its ecosystem,
“This portal has been built to reward $SHIB burners, with a passive income acknowledgment, in the form of $RYOSHI Rewards. Meaning that 0.49% of all RYOSHI transactions will be distributed to owners of $burntSHIB.”
However, 65 days after the beginning of the burning process and after 410,370,460,561,720 SHIB tokens have been removed from circulation, the memecoin creators have found that things have not gone according to their plans. The price of SHIB has significantly decreased as a direct result of the general bear market that has been going on in the cryptocurrency market. Here is what we know about the alternative’s performance since the debut of the burn portal, which comes at a time when the team is getting set to start compensating customers who burned their SHIB tokens.
Over the course of the past 65 days, there has been a consistent drop in the price of SHIB. When it started on the 23rd of April, the burning process, the price of a single SHIB token was $0.000024. At the time of this writing, the cryptocurrency was trading at $0.00001148, representing a drop of 109 percent from its previous value.
In addition to that, the market capitalization was estimated to be $13.36 billion sixty-five days ago. This figure was down to $6.28 billion at the time the article was published.
Since the beginning of the fire, SHIB has had a difficult time keeping the bears off of its back. The relative strength index (RSI) for the token has spent the previous 65 trading days below the 50-point level that represents neutrality. On the other hand, the cryptocurrency had some reprieve on June 21 and sought to pass over.
This provoked a response from the bear, one that drove it further to the south. Despite this, the bulls were able to force one more correction, which resulted in the RSI moving in the opposite way. The RSI showed a reading of 56.16 at the time of publication.
In spite of the coin burning taking place for 65 days, on-chain data demonstrated that the performance of SHIB was not significantly affected in any way.
Since May 12th, for instance, the number of different addresses used in SHIB transactions on a daily basis has been steadily decreasing. By the time this article was published, the number of daily active users on the network had dropped by 90 percent.
In addition, during the time period under consideration, the Shiba Inu network did not experience a significant amount of expansion. Since the 12th of May, the amount of newly established addresses on the network each day has decreased by more than 200 percent, according to the data provided by Santiment.
On the social front, the volume of social activity experienced a decrease of 87 percent during the same time period. Despite this, there was a consistent increase in social dominance, leading to a 10% increase in total, despite the fact that there were some dips along the way.
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