9/28/23 Roundup
Hi all,
This is Dylan LeClair, presenting this week’s Onramp Weekly Roundup.
Before we get started… If you’re a HNWI or Institution looking for the best way to get exposure to bitcoin, Onramp Bitcoin could be the right fit for you – schedule a chat with us to discuss your situation & needs.
And now, here’s the weekly roundup…
SEC Holds Firm, Delays ETF Approvals
The US Securities and Exchange Commission (SEC) has, in a recent development, again postponed its verdict on the approval of the pioneering US ETF centered on Bitcoin investments. This move marks the third postponement faced by the joint application of 21Shares and ARK Investment Management since April. The final decision is now pegged for January 10th—a surprising shift given that the original determination, whether for approval, rejection, or further delay, was scheduled for November 11th. This holdup affects more than just ARK and 21Shares, with industry giants like BlackRock Inc. and Fidelity Investments awaiting their turns.
James Seyffart of Bloomberg Intelligence weighed in on the unforeseen delay, positing that the SEC might be proactively hedging against upcoming challenges, such as the imminent government shutdown. The close proximity of these deferrals to a congressional open letter to the SEC has ignited conjecture about potential external influences on the commission’s decision-making.
Insight can be derived from the GBTC premium/discount—an arguably precise market barometer of ETF approval likelihood, which has deviated from its 2023 peak of -17% to -22% as of now.
With U.S. bond yields soaring past their 2022 zeniths, previous hopes of a smooth soft landing start to come into question. While these climbing rates could bolster the Federal Reserve’s endeavors against surging inflation, palpable repercussions are emerging. Asset valuations are getting pinched, and credit expansion is curtailed further.
Housing Market Freeze
With long end yields breaking out higher, the US real estate market confronts turbulence as mortgage rates ascend in tandem to their steepest rate since 2000, further depressing an already cautious home-purchase sentiment.
With many homeowners holding fixed rate mortgages for the long term, while new home buyers are facing the reality of massively inflated financing costs, mortgage applications are at levels below that of the Great Financial Crisis. The overarching high borrowing costs, reinforced by the Federal Reserve’s strategy against inflation, remain a formidable barrier, affecting not just new purchases but refinancing activities as well.
Risk-Free? Not So Fast...
Finally, on the topic of the unprecedented bond sell-off, we can evaluate bitcoin’s position in comparison to what was conventionally deemed—prior to the significant sell-off—as the world’s risk-free refuge: the U.S. Treasury Bond.
When assessing bitcoin’s performance against TLT (U.S. 20+ year bond ETF), bitcoin is only about 39% below its all-time high. This is notably more robust than the 61% dip seen in the BTC/USD exchange rate.
It’s important to note that the current macroeconomic cycle is unlike any that bitcoin has experienced in its relatively brief existence. Despite this, bitcoin’s resilience is more evident than many might presume. Projecting forward and contemplating the probable actions of policymakers and central banks in response to a potential future economic downturn clarifies the picture even further.
Podcast of the Week
E018: Bitcoin’s Custodial Landscape Through a Legal Lens with Gavin Fearey
On this week’s episode of The Last Trade, hosts Marty Bent, Jesse Myers, and Michael Tanguma are joined by Gavin Fearey, a bitcoin-focused lawyer at Winstead Law Group. Gavin has been at the forefront of advocating for bitcoin’s unique custody capabilities, including petitioning the SEC in 2018 to recommend improved guidance on bitcoin custody regulatory matters. In this conversation, Gavin shares his perspective about institutional adoption of bitcoin, the shifting legal and regulatory landscape for bitcoin becoming clearer, and other unique legal considerations for bitcoin.
Check out the full episode here.
Closing Note
Wrapping up this week’s digest, Onramp Bitcoin invites you to explore our offerings on our website.
With an industry-leading multi-party custody solution, Onramp allows Bitcoin withdrawals without triggering a taxable event. Onramp stands as an optimal solution for HNWI and institutions seeking Bitcoin exposure prior to transitioning to self-custody.
If Onramp’s offerings align with your needs, or those of someone you know, feel free to schedule a chat with us here.
Onward and Upward,
Dylan LeClair