Bitcoin ETFs Endure Harsh Outflows

The Breakdown First Five - Monday, March 25, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Do Kwon in Limbo

Do Kwon has been released from prison after serving his sentence for traveling on false papers. His extradition is still up in the air, with the latest ruling being a successful appeal by local prosecutors to block Kwon being shipped off to South Korea. Kwon will be housed at a “reception center” for foreigners while the appeal is decided, a move that his local representation claims is illegal. Also, it looks like he got shredded in Montenegro prison. 

4. Blackrock Downplays Ethereum

The mega asset manager said they were seeing only “a little bit” of demand for Ethereum from clients. The latest in a series of blows to the Ethereum ETFs suggests that Blackrock isn’t going to fight the SEC on this one. At least not yet. If the ETFs aren’t approved in May, issuers could elect to withdraw and try again for early next year when there could be a change of administration.  

3. Wallet Inspector

Google has added the ability to search ENS data from Etherescan. Many were outraged that their transaction information was more easily accessible. This confused anyone with a passing familiarity with how public blockchains work. If nothing else, a timely reminder that we can all see that coin you bought on Solana last week. Yes, that one. We can all see what you did forever immortalized on the blockchain. 

2. Euro AML Threatens Wallets

A wave of panic gripped crypto twitter with concerns that a new European anti-money laundering proposal would outlaw self-hosted wallets. It’s not quite a ban, but the rule does remove a €1000 threshold for KYC and require exchanges to “apply mitigating measures” when dealing with self-hosted wallets. Cash transactions above €10,000 will be banned. The rule isn’t expected to be enforced before 2027. This could be an incremental step towards a wallet ban. 

1. Full Week of Outflows

The Bitcoin ETFs saw net outflows every day last week, totaling $888M. Almost $2B was drained out of Grayscale, with Monday setting a new record for GBTC outflows. The most positive spin was that none of the large ETFs recorded net outflows on any day, suggesting this is entirely a Grayscale problem, likely linked to the Genesis liquidation. Net outflows across all products slowed to $51.6M by Friday, so maybe that’s the worst over with.