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Crypto ETFs Face Second Worst Week With $726M in Redemptions

Plus Bitcoin Lacks Clear Catalysts Despite Strong Monday Rally

Author

Nathaniel Whittemore
September 10, 2024

The Breakdown First Five - Tuesday, September 10, 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.

Plus Crypto ETFs Face Second Worst Week With $726M in Redemptions

5. Kalshi’s Odds Look Good

A court has granted a brief 3-day stay on the Kalshi decision that could see legal, regulated election prediction markets go live by the end of the week. A hearing will be held on Thursday to decide the matter, but the judge appears reluctant to allow the CFTC to delay launch any further. Newspaper headlines are blaring and Kalshi executives are acting as though it’s already a done deal.

4. Do RIAs Want Bitcoin

Jim Bianco set off tradfi Bitcoiners by claiming the ETFs have “NOT become a tool for tradfi or boomer adoption.” Bitwise CIO Matt Hougan had a very different view, pointing out that the Bitcoin ETFs have been the most rapidly adopted asset for investment advisors in history. While the vast majority of ETF holders are retail investors in personal accounts, we’re still in the earliest innings of investment advisor allocations.

3. FBI: Crypto Scams Up 45% 

The annual FBI report shows losses from crypto scams and fraud increased by 45% in 2023. Americans lost $5.6B to crypto-related scams, which includes a wide range of tangentially related schemes. The biggest category was fraudulent investments, which merely use crypto as a sales pitch. Also high on the list were romance scams and labor trafficking, though this is mostly international reports. Curiously, most people in scam investments were unaware. 

2. Bitcoin Lacks Catalysts

Despite a strong rally on Monday, analysts are still struggling to see a clear catalyst in the short term. We have the Presidential debate tonight, CPI tomorrow morning and the Fed meeting next week, but these are all viewed as volatility drivers rather than a clear reason for positivity. NYDIG’s Greg Cipolaro said, “potential upcoming near-term catalysts for Bitcoin are sparse at the moment” with most related to macro or policy, rather than being Bitcoin-specific. 

1. ETFs Second Worst Week

Global crypto funds had their second worst week ever, seeing $726M in total redemptions. Pretty bad considering US markets were only open for four days. Flows improved on Monday to a tepid $28M worth of inflows, breaking an eight-day streak of negative flows, the longest since the funds began trading. Blackrock had an uncharacteristic outflow of $9.1M.