Crypto Scoop: Bitcoin Dips Below $61,000 Temporarily While Stakeholders Share Predictions

While Bitcoin’s price may have plummeted temporarily, the crypto space maintains its positive sentiment as stakeholders share price predictions. In this edition of the Crypto Scoop, we review the following:

• Price moves and predictions for top cryptocurrencies
• Cardano’s fiat-backed stablecoin
• Speculations on Ethereum’s classification as a security
• Global regulation and adoption and more. 

Price Moves, Sentiments and Predictions For Top Cryptocurrencies

Last week bitcoin's price soared over $73,000 as it attained an All Time High (ATH). However, this week, bitcoin's price temporarily plummeted below $61,000. According to data from Farside Investors, Bitcoin ETFs collectively experienced staggering outflows, amounting to $326 million on Tuesday alone, marking the highest withdrawals since their launch in January. These consecutive outflows exerted downward pressure on Bitcoin's price, pushing it below $61,000 before rebounding at $66,000. 

Grayscale, a prominent asset management firm, responded to the mounting outflows from its spot Bitcoin ETF, GBTC, by announcing a reduction in management fees. With outflows exceeding $12 billion in just over two months, CEO Michael Sonnhenshein acknowledged the need to adapt to evolving market dynamics. He reassured investors that as the crypto ETF market matures, fees on GBTC would inevitably decline, offering a glimpse of hope amid market turbulence.

Despite recent setbacks, optimism persists among some financial experts. Bernstein, a leading wealth management firm, raised its year-end Bitcoin price target from $80,000 to $90,000, citing continued confidence in cryptocurrency's growth trajectory. This bullish sentiment was echoed by MicroStrategy's strategic move to buy the dip as it acquired over 9,000 BTC, worth approximately $623 million, signalling enduring faith in Bitcoin's long-term potential.
Standard Chartered, a global financial powerhouse, revised its previous Bitcoin price forecast to $150,000 by year-end and a staggering $250,000 by 2025. Standard Chartered's current prediction is based on historical data on how the introduction of gold exchange-traded funds (ETFs) in the US impacted gold prices, and a similar correlation between Bitcoin ETF inflows and BTC prices was noted.

Goldman Sachs reported a notable shift after the approval of Bitcoin ETF. Sachs reported that more institutions were diving into crypto, marking a psychological turning point in the market dynamics that retail investors had previously driven. This institutional inflow is considered a pivotal development, potentially reshaping the landscape of digital asset investments.

In a move indicative of broader institutional curiosity, Japan's Government Pension Investment Fund (GPIF), the world's largest pension fund, signalled interest in exploring Bitcoin as a diversification tool. As part of its five-year research plan, GPIF seeks to assess various investment avenues, including cryptocurrencies like Bitcoin, highlighting a potential shift towards embracing digital assets in traditional financial portfolios.

Cardano Overcomes Introduces Fiat-Backed Stablecoin 

Cardano, a prominent layer-1 blockchain, has marked a significant milestone with the introduction of USDM, its first fully fiat-backed stablecoin. Developed by Mehen Finance and launched on March 17, USDM offers a 1:1 peg to the United States dollar, providing users on the Cardano network with a reliable stablecoin option.

The journey towards launching USDM on Cardano hasn't been without its challenges. Mehen Finance faced considerable delays, originally planning a rollout in early 2023. These setbacks were aggravated by issues with crypto-friendly banks shuttering in 2023 and the departure of its banking partner to collaborate with Circle.

Matthew Plomin, a founding partner at Mehen Finance, acknowledged the difficulties encountered, particularly with U.S. banks, but expressed relief at finally bringing USDM to fruition in the Cardano ecosystem. Notably, USDM distinguishes itself from existing Cardano-based stablecoins like DJED and iUSD by offering a fiat-backed alternative rather than algorithmic or synthetic-based stability mechanisms.

Meanwhile, Cardano's development trajectory has been under scrutiny within the community, with a particular focus on the Hydra project. Hydra, a layer 2 scalability solution, aims to enhance transaction speed, reduce costs, and optimise Cardano's overall functionality.

In response to circulating rumours questioning the status of the Hydra project, Charles Hoskinson, co-founder of Cardano, intervened to dispel speculations. Hoskinson dismissed claims of abandonment as "pure FUD," emphasising the ongoing active development of Hydra. He underlined the team's heightened productivity and community engagement while reaffirming Cardano's commitment to innovation.

SEC Investigation Casts Shadow Over Ethereum Amidst Regulatory Uncertainty

The United States Securities and Exchange Commission (SEC) has launched a probe into the Ethereum Foundation, raising concerns about the regulatory classification of Ether, the second-largest cryptocurrency by market capitalisation. Reports indicate that the SEC issued subpoenas to several U.S.-based companies associated with the Ethereum Foundation, seeking documents and financial records related to their dealings. The investigation stems from the Ethereum blockchain's transition from proof-of-work to proof-of-stake in 2022, prompting the SEC to consider whether Ether should be classified as a security. Speculation intensified following hints by the Ethereum Foundation via GitHub, indicating potential scrutiny from state authorities.

The outcome of the SEC's investigation holds significant implications, particularly for the approval of exchange-traded funds (ETFs) directly investing in Ether. Numerous issuers, including VanEck and Fidelity, have sought regulatory approval for such ETFs. However, Bloomberg Intelligence analysts assess the likelihood of approval at a mere 25%, citing the regulatory uncertainty surrounding Ether's classification.
In response to the escalating concerns, Coinbase's chief legal officer, Paul Grewal, asserted Ethereum's status as a commodity, not a security. Grewal referenced former SEC official William Hinman's statement affirming Ether's commodity classification and emphasised the consistent recognition of Ether as a commodity by the Commodity Futures Trading Commission (CFTC) and federal courts.

Despite the regulatory scrutiny, the digital asset market appears resilient, with participants largely unfazed by the SEC's probe into the Ethereum Foundation.

Coinbase Derivatives Exchange Receives CFTC Approval for Dogecoin Futures Amidst Market Surge

In a significant development for the cryptocurrency market, the Commodities and Futures Trading Commission (CFTC) has approved Coinbase Derivatives Exchange to list futures contracts tied to Dogecoin (DOGE), Bitcoin Cash (BCH), and Litecoin (LTC). The announcement, which came on March 7, sparked a surge in the prices of all three tokens, signalling market enthusiasm for the impending listings.

According to the filing, the futures contracts are set to go live and commence trading on or after April 1, 2024. This move marks a notable expansion of Coinbase Derivatives' offerings, which currently include institutional and retail-sized contracts for Bitcoin (BTC), Ethereum (ETH), and crude oil contracts. The market's positive response to the news reflects heightened anticipation surrounding the potential impact of these futures contracts on the broader cryptocurrency ecosystem. 

Bloomberg ETF analyst James Seyffart suggested that Coinbase may have strategically chosen these digital assets due to their shared origin in the code of Bitcoin, which is widely recognised as a commodity by regulatory bodies. Seyffart's observation underscores the broader implications of Coinbase's move, as it could prompt regulatory bodies like the Securities and Exchange Commission (SEC) to clarify the distinction between securities and commodities in the context of digital assets.

Global Regulatory Landscape Shifts Amid Crypto Market Surge

Across various corners of the globe, regulatory developments are reshaping the landscape of the burgeoning cryptocurrency market, influencing investor behaviour and market dynamics.

The crypto market witnessed a remarkable boom in Indonesia, with transactions soaring to $1.92 billion in February. The surge in activity was accompanied by a significant increase in registered crypto investors, reaching 19 million users. The country's Commodity Futures Trading Supervisory Agency (Bappebti) attributed this growth to positive market sentiments driven by Bitcoin's price surge and rallies in alternative cryptocurrencies.

The Securities and Exchange Commission (SEC) proposed amendments to rules governing platforms offering crypto services in Nigeria. Notably, the SEC proposed increasing the registration fee for crypto exchanges from 30 million naira to 150 million naira, citing the need for clarity and aligning regulations with recent engagements with the Central Bank of Nigeria (CBN). The proposed amendments aim to enhance regulatory oversight and address crypto market concerns.

Meanwhile, lawmakers introduced a bill in Russia to extend money laundering controls to digital ruble transactions. Spearheaded by Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, the proposal outlines responsibilities for platform participants. It designates the Central Bank of Russia as the primary entity for Anti-Money Laundering (AML) efforts.

Estonia also took steps to regulate cryptocurrency service providers, with the government approving a bill subjecting these entities to supervision by the Financial Supervision Authority (FSA). The legislation aims to enhance oversight and compliance with AML rules, transitioning licensing responsibilities from the Financial Intelligence Unit (FIU) to the FSA by 2025. Estonian Finance Minister Mart Võrklaev emphasised the importance of obtaining FSA licenses for serious service providers.