Regulation
ETF Inflows Accelerate Again as Regulatory Stance on Cryptocurrencies Takes Positive Turn From Investing.com
Investing.com — Last week, it fell 0.9%, finishing just above the $67,800 mark. According to HC Wainwright, this performance was in line with the major stock indexes, with a decline of 0.5% and 1.4% respectively.
Mining stocks also lost 3.7%, reversing some of the previous week’s gains, when public miners rallied 10.8%.
The Bitcoin network’s hash rate declined sharply, falling 13.8% on a weekly basis to 567 EH/s, after reaching an all-time high of 657 EH/s (7-day average) the previous week. This marks the largest week-over-week drop in the network’s hash rate since the summer of 2021, when the Chinese government issued a ban on cryptocurrency mining.
Less efficient miners with higher energy costs continue to capitulate after the halving in late April, and a period of consolidation is expected in the coming months. More volatility in the network’s hash rate is also expected through September, as miners’ pruning activity picks up during the hot summer months in North America, where 38% of the network’s hash rate is currently based.
HC Wainwright details that network difficulty remained at 84.4T after the last positive adjustment of 1.5% on May 23, 2024, while higher transaction fees led to a 3.1% increase week over week hash prices at $0.055/TH/day.
Elsewhere, flows into spot BTC ETFs in the US have regained momentum in recent weeks following a positive change in the US government’s stance on cryptocurrency regulation and adoption. Former president and current presidential candidate Donald Trump made pro-cryptocurrency comments at the Libertarian National Convention in Washington DC on May 25, stating, “I will support the right to self-custody of the nation’s 50 million cryptocurrency holders… I will keep Elizabeth Warren and her minions away from your bitcoin…I will make sure the future of cryptocurrencies and the future of Bitcoin happen in the United States, not abroad.”
Cryptocurrencies are shaping up to be a major bipartisan issue ahead of November’s presidential election. In May, there was bipartisan support and approval in both the House and Senate to overturn the Securities and Exchange Commission’s Staff Accounting Bulletin (SAB) 121, which would have opened the door for traditional financial institutions to hold digital assets for their customers and make it easier for these institutions to work with crypto companies.
However, President Biden vetoed this proposal last Friday. Additionally, the House passed the Financial Innovation and Technology for the 21st Century Act (FIT21) on May 22, which provides a comprehensive regulatory framework for cryptocurrencies in the United States. The SEC also unexpectedly approved eight 19b-4 filings for ETH ETFs, including filings by Blackrock and Fidelity on May 23.
This improved regulatory environment for cryptocurrencies has led to 15 consecutive trading days of net inflows into BTC spot ETFs. During this period, through June 3, the funds collectively raised approximately $2.3 billion in total net inflows.
Additionally, BlackRock’s iShares Bitcoin Trust (NASDAQ:) became the fastest ETF in history to reach $20 billion in assets under management (AUM) last week, reaching this milestone less than five months after launch . IBIT is now the largest bitcoin fund in the world, surpassing Grayscale Bitcoin Trust (NYSE:), which had $19.7 billion in AUM as of June 3, 2024.