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Welcome to another insightful edition of the "What Happened to Bitcoin ETF?" newsletter. In this issue, we dissect the ETF market's dynamics from April 29th to May 10th, providing a detailed examination of asset movements and shifts in market perception. Here's what you can expect in this week's analysis:

• AUM and ETF Price Dynamics: Analyzing AUM changes in both U.S. and Hong Kong ETFs.

• BTC Holdings Weekly Flow: Reviewing weekly BTC holding fluctuations of U.S. and Hong Kong ETFs.

• Trends in GBTC Outflow: Examining GBTC outflows and their impact on the Bitcoin market.

• Looking Ahead: What to expect in the coming week.

Join us as we dive deep into the data and extract critical insights from the past week!

1/ Total AUM and ETF Price Dynamics:

Weekly AUM Overview:

Between May 3rd and May 10th, the financial landscape witnessed a striking upheaval as the total Assets Under Management (AUM) for Bitcoin ETFs underwent significant fluctuations. Initially poised at a robust $50.81 billion on May 3rd, the Bitcoin ETF AUM ominously dwindled to a mere $50.18 billion by May 10th. This notable decrease, amounting to a precipitous drop of approximately $625,849,785, represented a tumultuous week-over-week (WoW) change that ripped through the cryptocurrency market, reverberating among investors and the financial sectors alike.

🇭🇰 Hong Kong ETF AUM Overview:

The total AUM of the Hong Kong Spot Bitcoin ETF has risen to $262,703,000, up from $245,051,000 just a week ago, reflecting a robust increase of $17,652,000. However, this growth has not been sufficient to impact the overall Bitcoin price.

2/ BTC Holdings Weekly Flow:

Ending Holdings on May 10 (WoW Change):

• GBTC (Grayscale): 291,084 BTC (-155 BTC)

• IBIT (BlackRock): 274,062 BTC (+807 BTC)

• FBTC (Fidelity): 152,925 BTC (+1,684 BTC)

• ARKB (Ark 21Shares): 43,540 BTC (+1,314 BTC)

• BITB (Bitwise): 33,787 BTC (+327 BTC)

• HODL (VanEck): 9,333 BTC (+170 BTC)

• BRRR (Valkyrie): 8,105 BTC (-1 BTC)

• BTCO (Invesco Galaxy): 6,822 BTC (+306 BTC)

• EZBC (Franklin Templeton): 6,032 BTC (+58 BTC)

• BTCW (WisdomTree): 1,121 BTC (0 BTC)

• DEFI (Hashdex): 178 BTC (0 BTC)

Total: 827,763 BTC (+4,509 BTC)

🇭🇰 Hong Kong ETF Holdings on May 10 (WoW Change):

• ChinaAMC (9042): 1,939 BTC (-67 BTC)

• Harvest Global (9439): 1,107 BTC (0 BTC)

• Bosera Hashkey (9008): 1,109 BTC (+90 BTC)

Total: 4,155 BTC (+23 BTC)

3/ GBTC(Greyscale)'s Outflow Trend:

Last week, the outflow pace of GBTC notably decreased, dropping from the previous week's 7,207 BTC to just 155 BTC. This significant reduction in the weekly outflow rate suggests a mitigation of negative market sentiment, indicating that the net flow could potentially transition to an inflow. Such trends have historically been a precursor to a surge in Bitcoin prices, as a notable inflow into the Bitcoin ETF market typically precedes a price increase.

• Note: All data sources are from the Bitcoin ETF Fund Flows.

4/ Looking Ahead:

As we delve into the upcoming week, the revelations that two of the largest banks in the United States—JP Morgan and Wells Fargo—have made significant investments in spot Bitcoin ETFs could potentially reshape the Bitcoin market landscape. Amid the backdrop of market volatility and ongoing regulatory uncertainties, these moves are particularly noteworthy.

JP Morgan and Wells Fargo’s foray into Bitcoin ETFs, with investments totaling hundreds of thousands of dollars in vehicles such as BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale Bitcoin Trust (GBTC), signifies a significant pivot in their approach towards cryptocurrencies. Historically skeptical, these banks are now aligning themselves with the growing trend of traditional financial institutions embracing Bitcoin investments. This shift could serve as a harbinger of increased institutional comfort with and commitment to the crypto space.

For Bitcoin prices, which are currently hovering around $60,000, down from a high of $73,000, the investments by such significant market players might provide a stabilizing effect. The backing by major banks enhances the legitimacy of Bitcoin as an investable asset and could attract further institutional inflows, potentially cushioning the cryptocurrency against some volatility and fostering a more stable price trajectory in the near term.

In terms of ETF flows, the involvement of major banks suggests that we may see an increase in the volume of transactions and investments within Bitcoin ETFs. With JP Morgan and Wells Fargo setting a precedent, other traditional financial entities are likely to follow suit, increasing demand for Bitcoin ETFs. This could lead to more robust and sustained inflows, contrasting with the sporadic trends observed in recent months.

Furthermore, the ongoing legislative developments, such as the US House passing a bill to ease SEC guidelines on cryptocurrencies, indicate a potentially more favorable regulatory environment moving forward. This could enhance the appeal of Bitcoin ETFs, attracting both retail and institutional investors.

Overall, looking ahead to this week, we can anticipate a heightened focus on Bitcoin ETFs in the financial markets, with possible implications for Bitcoin prices. The continued interest and investment from major banks could lead to a steadier market with more predictable flows and less susceptibility to sharp, speculative movements. This evolving dynamic suggests a maturing market where Bitcoin is increasingly seen as a stable investment comparable to traditional assets.

What’s Hot This Week?

1/ Bitcoin Faces a Week of Economic Shocks and Sharp Price Movements

Last week, the Bitcoin market felt the shockwaves of new economic data and changing market sentiments. Following the release of the latest U.S. consumer sentiment and inflation expectations, Bitcoin prices experienced a sharp decline. Here's a rundown of the key events stirring the crypto market:

- Bitcoin's Response to Economic Indicators: The Bitcoin price tumbled in response to discouraging data from the University of Michigan regarding consumer sentiment and inflation. Consumer sentiment fell sharply from 77.2 in April to 67.4 in May, significantly below market expectations. Meanwhile, inflation expectations for the coming year rose to a six-month high of 3.5%.

- Significant Price Drop: Bitcoin's price plunged more than 4% in just a few hours, hitting an intraday low of $60,690. This drop was precipitated by a sudden increase in inflation forecasts and a downturn in consumer confidence, driving the price down from a recent high of $63,446.

- Massive Market Liquidations: The crypto market saw an intense hour of liquidations, with over $50 million worth being wiped out. In total, the last 24 hours have seen over $150 million liquidated, affecting more than 54,000 traders. The largest single liquidation order occurred on the Binance exchange, involving a BTC to USDT transaction valued at $3.56 million.

- Impact on U.S. Financial Markets: The release of inflation data also impacted broader financial markets, with the U.S. dollar index (DXY) climbing to 105.40 and the U.S. 10-year Treasury yield increasing to 4.504%. These movements are inversely related to Bitcoin prices, contributing further to the cryptocurrency's volatile week.

- Outflows from Bitcoin ETFs: Amid these market movements, U.S. Spot Bitcoin ETFs, particularly the Grayscale Bitcoin Trust (GBTC), reported significant outflows. Last week, GBTC alone accounted for over $100 million in negative flow, reflecting the market's heightened anxiety and the shifting investor sentiment towards safer assets.

Last week's market activity highlights the fragile balance within the cryptocurrency sector, heavily influenced by macroeconomic indicators and investor sentiment. As traditional financial markets react to the latest economic data, the cryptocurrency market remains tightly coupled to these broader economic trends, setting the stage for continued volatility and uncertainty.

2/ Tracking Bitcoin's Price via Coinbase Premium Index

Bitcoin continues its volatile journey, with its price frequently fluctuating. However, there remains a glimmer of optimism among analysts regarding potential upcoming trends, particularly in the wake of the Bitcoin ETF's presence in the market for over four months now.

This week, the focus is on the Coinbase Premium Index, a vital indicator that measures the price discrepancy between Bitcoin on Coinbase Pro and Binance. This index highlights the differing trading behaviors between the predominantly US-based users of Coinbase and the global audience of Binance.

Understanding the Coinbase Premium: Typically, a positive index value indicates stronger buying pressure on Coinbase compared to Binance, suggesting higher prices on the former. Conversely, a negative index value, where Binance's prices are higher, suggests stronger selling pressure on Coinbase.

Historical data analyzed by CryptoQuant suggests an intriguing pattern: Bitcoin's price tends to rebound when the Coinbase Premium shifts from positive to negative. This trend was notably observed following significant events such as Grayscale's legal victory over the SEC, which positively influenced Bitcoin prices.

Currently, the Coinbase Premium Index hovers close to zero in the positive range. However, should this trend invert to negative, analysts predict a likely price rebound for Bitcoin. This historical pattern, if it repeats, offers a strategic point for investors looking to capitalize on potential upswings.

Despite these price oscillations, Bitcoin's appeal remains robust, bolstered by the established presence of spot Bitcoin ETFs in the market, which continue to attract investor interest. Moreover, Coinbase's Q1 earnings report showed a substantial 72% increase in total revenue, highlighting the enduring allure and robust engagement within the crypto space.

As we monitor the Coinbase Premium Index this week, the crypto community remains alert to the possibility of a strategic rebound, poised to make informed moves based on these predictive trends.

🐦 Hot Tweet of the Week

1/ Roaring Kitty has returned. Which hedge fund will suffer losses this time?

2/ UBS has invested in Bitcoin ETF

3/ Prepare for USD collapse - buy Bitcoin now

🍫CRYPTO CRUMBS ON THE TRAIL 🍫

Dive into this week's crunchy bites of important news, serving up the freshest updates and insights from the crypto world.

Here's what's on the menu:

1. Bitcoin Mining Difficulty Slumped Last Week in Biggest Decline Since Crypto Winter: Bernstein

   Lower cost miners have increased market share since the bitcoin halving, the report said.

2. Top Analyst Issues Bitcoin Warning, Says BTC at Risk of Flashing ‘Ginormous’ Sign of Weakness

   A crypto trader who nailed the 2022 Bitcoin bottom thinks that BTC is at risk of witnessing an over 15% correction.

3. El Salvador Enhances Bitcoin Treasury Transparency With Launch of Dedicated Mempool Space – News Bytes Bitcoin

   In a significant move towards transparency, El Salvador's National Bitcoin Office (ONBTC) has announced the launch of its own mempool space.

4. Metaplanet Makes Bitcoin a Reserve Asset As Japan’s Debt Mountain Grows

   The announcement comes as the yen, one of the top five global reserve currencies, bears the brunt of Japan's fiscal imprudence.

5. Bitcoin Is Rising. Why Prices Need to Hit This Key Level to End Crypto Worries.

   Nvidia stock is rising in early trading Monday. Arm Holdings is seeking to launch its first AI chips in 2025, according to a report.

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Stay charged,

SmashFi Team

P.S. - Follow me on X (@brianhoonjong) for daily doses of insightful updates on Bitcoin ETFs and beyond! 🚀🐦

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“What Happened to Bitcoin ETF?” Newsletter: Dissecting the daily crypto craze with sharp insights and electrifying updates.

Disclaimer: This newsletter is for the brainy and the brave. It's for informational purposes only and not a substitute for investment advice. Always do your own research.