Crypto bull’s comeback? Here are factors driving institutional interest

Crypto in a flash

Bitcoin BTCUSD,
-0.14%
lost 3.9% over the past seven days, trading at around $23,297 on Thursday, according to CoinDesk data. Ether ETHUSD,
+1.32%
fell 2.6% over the seven-day stretch to around $1,865. Meme token Dogecoin DOGEUSD,
-4.95%
gained 10.9% while another dog-themed token, Shiba Inu SHIBUSD,
-7.51,
advanced 19.7% from seven days ago.

Cryptometrics

Crypto bull’s comeback?

After months of muted activity in the crypto market, there have been some signs that institutional and retail interest is picking up, prompting some investors to question whether the worst is already over. Bitcoin is up 24% from June lows, but still down 50% year-to-date, according to CoinDesk data.

Blackrock BLK,
+0.27%,
the world’s largest asset manager, last week launched a spot bitcoin private trust, available to US institutional investors.

“Despite the sharp decline in the digital asset market, we continue to see significant interest from some institutional customers in how they can efficiently and cost-effectively access these assets using our technology and product capabilities,” the company said in a blog post.

Meanwhile, lending activity in the crypto space has seen a bounce, Luke Farrell, crypto trader at GSR, said in an interview. Starting in June, lending activity was almost “shut down to zero” as the digital asset industry struggled with contagion as crypto hedge fund Three Arrows and lender Celsius went bankrupt, according to Farrell. “Lenders across the spectrum from DeFi pools to large lenders like Genesis really had no appetite to lend.”

“Over the last two weeks we have seen an increase in that rate. They’ve gone up naturally because of the credit freeze, but you’re seeing new money willing to be distributed, Farrell said. Still, interest rates are “not as high as they could be,” according to Farrell.

“To me, this shows a lot of a lot of capital on the sidelines wanting to deploy to yield strategies or things that could generate a return or income that was a little more market neutral bias, rather than just buying tokens,” noted Farrell.

Indeed, with the Ethereum “Merge” coming up, “there is clearly institutional and whale interest and accumulation,” according to Tom Dunleavy, senior research analyst at Messari. “Merge” is a long-awaited upgrade that will transition Ethereum from proof-of-work to proof-of-stake, a consensus mechanism that is much more energy efficient, and will pave the way for the blockchain to become cheaper and more. productively.

According to blockchain data, the number of addresses that have over 100 ether, 1,000 ether and more than 10,000 ether have seen a sharp increase, Dunleavy noted.

Some traders have borrowed ether in anticipation of an Ethereum hard fork. In late July, Ethereum miner Chandler Guo proposed to split, or split the chain, with one that continues to be based on the proof-of-work consensus mechanism. If that happens, all ether holders will receive an equal amount of the new tokens on the forked chain.

“Presumably there will be some kind of value in that,” Dunleavy said. “So holding native ether going into the merge, if you assume there will be some value from the fork, is a strategy I think a lot of people are following through these lending protocols.”

On the retail side, investors are not as active in Ethereum “Merge” trades. The number of addresses with between 0.1 ETH and 1 ETH has remained unchanged in July and August, Dunleavy noted.

Still, meme coinage surged, which some attributed in part to the return of retail interest. I have written more about it here.

Hear from Mike Novogratz at the Best New Ideas in Money festival on September 21st and 22nd in New York. The Galaxy Digital boss has ideas for navigating the crypto winter.

Genesis cuts 20% workforce

The contagion from the collapse of some major crypto companies is not over. Genesis, one of the largest crypto lenders, said it has laid off 20% of its workforce. The company’s CEO Michael Moro is also stepping down, while the company’s CEO Derar Islim will take on the role of interim CEO, according to a statement.

Genesis previously filed a $1.2 billion claim against Three Arrows, which is in liquidation, while Genesis’ parent company Digital Currency Group insured the entire claim.

Crypto companies, funds

Shares of Coinbase Global Inc. COIN,
-2.39%
was down 3.6% to $82.37 on Thursday and they were down 2.06% in the last five trading sessions. Michael Saylor’s Micro strategy Inc.
MSTR,
-0.27%
fell 1% Thursday to $321.95, while shares are down 4.6% over the past five days.

Mining company Riot Blockchain Inc. RIOT,
-0.78%
shares fell 1.4% to $8.23 on Thursday, losing 13.5% over the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
+0.52%
up 0.5% to $15.53, having lost 9.7% in the past five days. Another miner, Ebang International Holdings Inc. EBONY,
-4.43%
saw shares down 4.5% at $0.53 on Thursday, for a 6.4% decline over the past five days.

Overstock.com Inc.
OSTK,
-3.77%‘s
shares fell 4.8% to $30.55. Shares traded 1.6% lower during the five-up period.

Shares of Block Inc.
SQ,
-0.68%,
formerly known as Square, fell 0.9% to $79.66 and was down 7.3% for the week. Tesla Inc. TSLA,
-0.48%
shares were down 0.1% at $910.65, up 5.9% in the past five days.

PayPal Holdings Inc.
PYPL,
+0.39%
picked up 1.2% to $100.57, up 1.5% in five sessions. Nvidia Corp.
NVDA,
+2.28%
shares rose 2.3% to $187.53, looking at a gain of 4.5% in the past week.

Advanced Micro Devices Inc.
AMD,
+2.21%
shares rose 2.4% to $100.60 on Thursday, up 2.5% from five trading days ago.

Among crypto funds, ProShares Bitcoin Strategy ETF
BITO,
+0.66%
rose 0.5% to $14.38 on Thursday, while its Short Bitcoin Strategy ETF
BITI,
-0.68%
fell 0.4% to $33.50. Valkyrie Bitcoin Strategy ETF
BTF,
+0.56%
added 0.2% to $8.94, while VanEck Bitcoin Strategy ETF
xbtf,
+0.79%
traded 0.2% higher at $22.60.

Grayscale Bitcoin Trust
GBTC,
+1.30%
advanced 1.8% to $15.23.

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