M6 Labs L1, L2 & DeFi Weekly

GM Anon! Last time we connected anticipation was building for the ETF and now it’s here! The suits have formally arrived in crypto. How will this play out? Many crypto natives view this as a negative thing for the long-term health of the space, especially when one considers crypto was meant to build an alternative to the traditional financial system. 

Only time will tell how this all plays out, but in the meantime enjoy your bags getting pumped to the moon! Let’s dive into this week’s content!

Alpha Take Of The Week

State Of The Market: A New Era

There’s no denying that crypto will never be the same following this monumental event. Let’s take a look at how the market is reacting.

TLDR

• Bitcoin spot ETFs saw $4.6B in trading volume on their first day.

• Grayscale, BlackRock, and Fidelity led in trading volumes.

• Bitcoin futures open interest on CME reached an all-time high of $5.4B.

• Asset managers increased long futures interest.

• Digital asset products received $151M in inflows in the first week of 2024.

• Ethereum surged following ETF news.

• Several testnets for various protocols are emerging, offering opportunities for users to earn rewards.

The launch of  BTC spot ETFs has made a significant impact on the crypto industry, with approximately $4.6B in trading volume recorded on their inaugural day of trading, based on data from LSEG. 

• This milestone marks the commencement of trading for eleven spot bitcoin ETFs, featuring industry giants like BlackRock's iShares Bitcoin Trust and Grayscale Bitcoin Trust. Leading the charge in trading volumes are Grayscale, BlackRock, and Fidelity, highlighting the substantial appetite for these new investment products.

• The approval by the SEC represents the culmination of a decade-long struggle between regulators and the crypto industry. Despite concerns expressed by some executives about the inherent risks associated with Bitcoin.

Following the ETF launch, issuers engaged in intense competition by aggressively reducing fees for their products, even before their official market debut. The fee structures for these new bitcoin ETFs range from 0.2% to 1.5%, with many firms offering fee waivers for specific durations or asset thresholds. 

• The conversion of Grayscale's existing bitcoin trust into an ETF solidified its position as the world's largest BTC ETF, amassing over $28B in assets under management overnight. 

• While analysts' estimates regarding the potential inflow of funds into spot bitcoin ETFs vary, projections range from $10B in 2024, as suggested by Bernstein analysts, to a more optimistic outlook of $50B to $100B for this year alone, as posited by Standard Chartered analysts. 

Bitcoin futures open interest on the Chicago Mercantile Exchange surged to an unprecedented level this past week, marking a significant milestone for the crypto market.