It’s historic. Venture capital just poured $17 billion into the cryptocurrency markets. That’s more money in one year than the last 10 years COMBINED. Why so much money? And why now?

Because the cryptocurrency market is growing faster than at any time in history. It took 12 years for the crypto market to reach $1 trillion by market cap… But this year – in the span of only 3 months – it DOUBLED to $2 trillion, and now is worth ~$2.5 trillion. Geez! How could this possibly happen? How could the mainstream bankers overlook or, to put it mildly, underestimate such a violent breakout of a new reality?

Nasdaq.com, the citadel of classic market news and research, quotes Berkshire Hathaway’s #2, 97 year-old Charlie Munger, as saying: “Disgusting and contrary to the interests of civilization” “Of course I hate the Bitcoin success. I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth. I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.”. Let’s not indulge in a counter-offensive and just peacefully note that the rise of decentralization would not have happened without their ‘titanic efforts’ to dethrone the old fiat system where uncontrolled money-printing eventually buried a lot of faith in it.

Yes, whether some like it hot or not, It’s the fastest wealth-creation phenomenon of our time. And not only whales but venture capital firms are increasingly betting big on it (see chart below). Institutions eventually gave up their demagogy and quickly formed lines to get it. What are they buying?

The first day of trading for the new ProShares exchange-traded fund (ETF) linked to Bitcoin (ticker BITO) lured an unexpectedly big number of institutional investors, with shares rising 4.7% on a volume of more than 23 million shares. The enthusiasm helped drive the price of Bitcoin up 4.5% along with shares of crypto exchange Coinbase (COIN) by more than 4%. According to a Bloomberg report, more than 12 million shares were exchanged at the start of trading, and their starting price was $40. The price increased by 5.4% to $42.12 per share, at the time of writing having moved further up to ~$42.90.

 

On October 15, the Securities and Exchanges Commission, SEC, approved ProShares’ application to launch the Bitcoin Strategy ETF. On Friday, the shares of the ProShares Bitcoin Strategy ETF were added to the Bloomberg terminal under the ticker BITO – the price of the first cryptocurrency rose above $ 62,900.

Trading started on Monday, October 18th. The move was based on the updated prospectus and the expiration of the 75-day cooling-off period. Since the Department did not issue an injunction the deal was considered approved, although the Commission did not voice it publicly.

The underlying asset of the fund is the Bitcoin futures of the Chicago Mercantile Exchange – the ones promoted by Goldman Sachs a long time ago. In the updated document, references to investing in Canadian bitcoin ETFs have disappeared. The Nasdaq Stock Exchange has also expressed its willingness to add to the listing a similar product from Valkyrie Investments, which had previously filed Form 8-A on the registration of securities. The same form was filled out by ProShares.

But The ProShares Bitcoin Strategy ETF (BITO) is based on futures contracts, which, as ProShares mention in their prospectus, don’t precisely track the physical price of Bitcoin because the Securities and Exchanges Commission hasn’t approved an ETF directly holding physical Bitcoin. Traditional crypto-curious investors are more familiar with Greyscale that has a trust (GBTC) physically holding Bitcoin. The complexity of BITO’s price-formation is outlined by the fact that the trust structure can lead to differences between the fund’s net asset value, NAV, and the price of Bitcoin. On Tuesday, Greyscale filed to convert it to an ETF.

But many investors remember, that Canadian regulators earlier this year approved a number of sibling ETFs that hold Bitcoin directly. The first one launched in February from Purpose Investments on the Toronto Stock Exchange. The Canadian dollar-denominated, non-currency hedged version trades under the ticker symbol BTCC.B. American investors who want to pay by U.S. dollars can approach the U.S. dollar-denominated version under ticker of BTCC.U (see chart below).

After the skyrocketing week, Bitcoin stabilized above $60,000. Throughout the week, Bitcoin has gained the strongest momentum it has faced since January. Over the past seven days, Bitcoin appreciated by 11%. At the time of writing, the coin is trading near $ 60,950. It doesn’t mean it can’t reverse, but it means hell a lot of lifting power, and it can’t come just out of someone’s malicious speculation or infant naivety.

As of now, most digital assets from the top 10 by market capitalization are in the green zone by association. After the announcement of the Polkadot developers about the readiness to launch parachains on the main network, DOT advanced by more than 14%. Furthermore, according to the Messari service, among all more or less liquid cryptos, the native token of the NuCypher decentralized network has appreciated the most. The price of NU rose by 423%, and its capitalization now exceeds $1 billion. This happened after the announcement of its listing on one of the largest South Korean Upbit.

Now the market capitalization of the entire cryptocurrency market has reached $2.6 trillion. Bitcoin dominance index rose to 44.7%.

Another good news across the universe of landslide acceptance: According to Deputy Finance Minister Alexei Moiseev, the Russian authorities changed their mind and now do not plan to prohibit citizens from buying cryptocurrencies on foreign exchanges. In the meantime, regulators will focus on banning the use of digital currencies as a means of payment domestically to avoid losing control over the money supply. The next day, Russian President Vladimir Putin spoke about cryptocurrencies. In response to a question about the use of digital assets in oil settlement, he stated:

“Cryptocurrency, of course, can be a unit of account, but it is very unstable. In order to transfer funds from one place to another, yes, but to trade, let alone trade in energy resources, in my opinion, is still premature. ” At the same time, the Bank of Russia called citizens’ investments in Bitcoin “a potentially significant problem”.

Meanwhile, the United States has displaced China from the position of the leader in the amount of computing power on the Bitcoin network. Since May 2021, the U.S. share of the total hash rate has grown from 17.8% to 35.4% in August (the last available checkpoint), according to data from the Center for Alternative Finance at the University of Cambridge.

The share of Russia from the May indicator of 7.2% increased to 11.2%. In Kazakhstan, it increased from 7.4% to 18.1%, and in Canada – from 4.7% to 9.6%. Those were the countries, along with the United States, that experts indicated as the main destinations for the migration of Chinese cryptocurrency mining capacities.