Spot ETH ETFs Surpass $1B in Volume on First Day of Trading, Crypto Rallies After Biden Drops Out

Takeaways

• US Spot ETH ETFs received net inflows of $107 million in their debut Tuesday: The launch could drive ethereum prices up in the long run, although inflows may be lower compared to spot bitcoin ETFs.
• Bitcoin briefly surged above $68,000 before pulling back: The volatility came as President Joe Biden pulled out of the race and the tech market faced a wider sell-off.
• Marathon Digital was fined $138 million for breaching a non-circumvention agreement with Michael Ho: Marathon remains the top bitcoin mining firm by market capitalization.
• Germany's sale of 50,000 BTC from a piracy case led to $124 million in missed profits: Bitcoin prices surged post-sale in part due to an assassination attempt on Donald Trump, highlighting the risks of timing in asset liquidation.
• BlockFi has sold its FTX claims, facilitating a final distribution of 100% of customer and unsecured creditor claims: The distribution marks a significant step toward concluding its bankruptcy process.

Sign up for a Gemini account

The secure way to buy, sell, store and convert crypto. Millions use Gemini to diversify their portfolios.

Get started

US Spot ETH ETFs Go Live, With Day One Net Inflow of $107 Million

US spot ethereum ETFs began trading Tuesday after receiving final approval from regulators, which allowed US-based ETFs to offer direct exposure to the second largest cryptocurrency for the first time. The approval follows a lengthy process and comes after the SEC approved spot bitcoin ETFs in January.

On the first day of availability, investors traded more than $1 billion worth of shares in the newly launched ether ETFs, according to Bloomberg data. Of the $1 billion, a net inflow of $106.7 million was recorded. A significant portion of the outflow, totaling $484 million, reportedly originated from Grayscale's Ethereum Trust (ETHE). BlackRock iShares Ethereum Trust ETF (ETHA) received the most inflows, totaling $267 million.

On Wednesday, spot ether ETFs experienced more volatility, recording $133 million in net outflows. That was due entirely to Grayscale’s ETHE, which saw $327 million in net outflows. It was the only approved spot ether ETF to experience outflows.

Some analysts have predicted that spot ether ETFs could eventually drive the price of ether significantly higher, although inflows will likely not match those of bitcoin ETFs. It remains to be seen how spot ether ETFs will perform over time in comparison to their bitcoin counterparts. The price of ether had dipped around 11% over the past five days, settling at $3,132.86 as of 3:25 pm ET on Thursday.

Biden Withdraws from Presidential Race, Bitcoin Wobbles

Bitcoin experienced a brief rise above $68,000 on Monday, fueled at least in part by sentiment change surrounding the US election. The rise in bitcoin’s value positively influenced other major cryptocurrencies, with ether momentarily exceeding $3,500. ADA and SOL also each gained up to 5%.

Bitcoin’s gains began late Sunday after President Joe Biden announced on X that he would not run in the upcoming November election. A few hours later, Biden endorsed vice president Kamala Harris, a former California attorney general who has connections to Silicon Valley and whom some analysts feel may take a softer regulatory stance toward the crypto industry. Biden’s decision affected the betting odds on Polymarket, causing Donald Trump’s chances of victory to drop and Harris’s odds to rise.

Trump-related meme coins also experienced gains, with both Tremp and DJT reaching their highest levels since the attempted assassination of Trump on July 13. Trump's supportive stance on cryptocurrencies has attracted substantial backing from the crypto community.

Additionally, Trump’s appearance at the Bitcoin 2024 conference in Nashville this week has further lifted market sentiment, with rumors circulating that Trump could announce his plans to launch a strategic US Bitcoin reserve. Harris was reportedly in discussions to speak at the conference but ultimately declined.

After surpassing $68,000 earlier in the week, the price of bitcoin pulled back amid a wider tech sell-off and strong GDP numbers, settling just below $65,000 as of 3:30 pm ET on Thursday.

Marathon Digital Fined $138 Million for Breach of Agreement

Marathon Digital, the world's largest bitcoin mining company by market capitalization, has been fined $138 million for breaching a non-circumvention agreement. Michael Ho, former co-founder of US Bitcoin Corp and current chief strategy officer at Hut 8, won a unanimous jury verdict in his favor against Marathon Digital Holdings.

In 2020, Ho developed a growth strategy for Marathon which included plans for a large bitcoin mining facility. According to the law firm representing Ho, Marathon executed this strategy without compensating Ho for his proprietary information, thus breaching their agreement.

Marathon Digital continues to lead the bitcoin mining industry with a market capitalization of $6.77 billion, significantly ahead of its nearest competitor, CleanSpark. The company is also growing its mining capacity – having doubled its operational hashrate YoY in June.

German Government Misses $124 Million in Paper Gains Through Sale

The German state of Saxony recently sold 50,000 bitcoin, seized from the movie piracy website movie2k, for approximately $2.87 billion on July 13. This sale generated over $740 million in profit compared to the $2.13 billion purchase cost in January. However, the timing proved costly as bitcoin prices surged by more than 16% immediately after, driven by news of the assassination attempt on Donald Trump.

If Saxony had sold its bitcoin in March, when it reached around $74,000, they could have realized a $1.5 billion profit. The subsequent 12% drop in bitcoin’s price during the sale period also contributed to a loss of potential profit.

The Dresden Public Prosecutor's Office initiated "emergency sales" in June due to fears of a potential value drop exceeding 10%. They stressed that enforcement agencies must sell seized assets promptly to fund criminal proceedings rather than waiting for potential price increases.

BlockFi Sells FTX Claims as Bankruptcy Resolution Nears

BlockFi has finalized the sale of its FTX claims as it approaches the conclusion of its bankruptcy process. According to a statement, Mohsin Y. Meghji, BlockFi plan administrator and managing partner at M3 Partners, reported this development to the US Bankruptcy Court for the District of New Jersey on Monday.

Earlier this year, BlockFi reached a preliminary settlement of $874.5 million with the FTX and Alameda Research estates, which allowed preparations to begin for distributions to BlockFi creditors. This sale marks the final stage of the company’s winding down, as it will enable final distribution of 100% of eligible customer and general unsecured creditor claims in fiat funds.

With BlockFi having paused customer withdrawals in November 2022 and subsequently filed for Chapter 11 bankruptcy, the bankruptcy court had approved BlockFi's repayment plan in September last year for its 10,000 creditors.

In May, the platform also shut down its website and announced it would begin crypto repayment distributions through Coinbase starting in July, with batches processed over the following months. Fiat claims, however, are not being managed by Coinbase, but rather by Kroll and its payment partner, Digital Disbursements.

-From Team Gemini