Largest Weekly Inflows in Digital Assets in Over a Year, Led by Bitcoin

In a significant shift of sentiment, digital asset investment products experienced their largest single weekly inflows since July 2022, totaling a substantial $199 million, according to CoinShares report. This surge effectively corrected almost half of the prior nine consecutive weeks of outflows, signaling renewed investor confidence in the market.

Bitcoin emerged as the primary beneficiary, capturing a staggering $187 million in inflows last week, which accounted for an impressive 94% of the total funds. This surge in Bitcoin investment comes amidst one of the largest price surges in recent times, as the cryptocurrency experienced a remarkable 20% increase over the course of the week.

Conversely, short-bitcoin products continued to face outflows for the ninth consecutive week, with a total of $4.9 million withdrawn.

However, this positive sentiment did not extend to altcoins, as they only witnessed minor inflows. Ethereum, the second-largest cryptocurrency by market capitalization, attracted $7.8 million in inflows. Although this figure represented a mere 0.1% of assets under management (AuM) compared to Bitcoin’s 0.7% inflows, it indicated a relatively lower appetite for Ethereum in the current market.

The positive market shift was primarily attributed to recent announcements made by high-profile exchange-traded product (ETP) issuers. These issuers have filed applications for physically backed exchange-traded funds (ETFs) with the US Securities and Exchange Commission, generating renewed optimism among investors.

The total assets under management (AuM) for digital asset investment products now stand at an impressive $37 billion, reaching their highest point since before the collapse of 3 Arrows Capital.

While Bitcoin experienced significant inflows, outflows persisted for short-bitcoin products. Over the course of the past nine weeks, outflows accounted for 60% of the total AuM, further highlighting the divergence in investor sentiment.

Other altcoins, including XRP and Solana, saw only marginal inflows of $0.24 million and $0.17 million, respectively. However, the improved market sentiment did encourage some investors to explore multi-asset investment ETPs, resulting in $8 million in inflows during the previous week.

Overall, the surge in inflows into digital asset investment products, particularly Bitcoin, suggests a growing confidence among investors, possibly driven by the anticipation of new physically backed ETFs in the US market. While altcoins have yet to witness a substantial boost, the market remains dynamic, and investor preferences may shift as new opportunities emerge.


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Bittrex Faces Potential Legal Action from US SEC

The US Securities and Exchange Commission’s (SEC) enforcement division is reportedly considering recommending legal action against Bittrex, a Seattle-based cryptocurrency exchange, over alleged violations related to investor protection. Bittrex’s general counsel, David Maria, confirmed that the enforcement unit had notified the company about the potential action in March. By that time, Bittrex had already begun the process of winding down its US operations.

The SEC’s notice of potential enforcement action, also known as a Wells notice, stated that Bittrex had violated laws by operating as an exchange, broker-dealer, and clearinghouse without registering with the regulator. In late 2022, Bittrex reportedly discussed with the SEC how to register its operations but found that there was no opportunity to comply with the SEC’s rules without essentially ceasing all of its revenue-producing activities in the country.

Bittrex has been operating in the US since 2014 and has been one of the larger cryptocurrency exchanges in the country. The exchange has faced regulatory scrutiny in the past, including in 2018 when it was denied a license to operate in the state of New York.

The SEC’s potential legal action against Bittrex comes amid increasing regulatory scrutiny of the cryptocurrency industry in the US. The SEC has been actively targeting cryptocurrency exchanges and other players in the industry for non-compliance with securities laws and regulations.

Many in the cryptocurrency industry have called for clearer regulatory guidelines to provide more certainty and stability to the market. The lack of regulatory clarity has been cited as a barrier to institutional adoption of cryptocurrencies, which some believe could help to legitimize the industry and bring in more investment.

In response to the potential legal action from the SEC, Bittrex has said that it is committed to complying with all applicable laws and regulations and that it has been working with regulators to ensure compliance. The exchange has also stated that it will continue to operate in other jurisdictions outside of the US.

In conclusion, the potential legal action from the SEC against Bittrex underscores the increasing regulatory scrutiny of the cryptocurrency industry in the US. While many in the industry have called for clearer guidelines, regulators are taking a more active approach to enforcement, which could have significant implications for the industry going forward. Bittrex’s decision to wind down its US operations highlights the challenges faced by cryptocurrency exchanges in navigating the complex and evolving regulatory landscape.


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Ripple Executives Call on Congress for Clear Crypto Guidelines As SEC’s XRP Lawsuit Rolls On

Top executives at Ripple Labs are calling upon Congress to create transparent crypto regulations as Ripple’s legal battle over XRP with the U.S. Securities and Exchange Commission (SEC) continues.

In response to a report that federal agencies asked Congress for more power to regulate stablecoins, Ripple Labs CEO Brad Garlinghouse took to Twitter to say that the legislative branch should consider creating clear guidelines for the crypto industry as a whole.

“There is a lot at stake here, which is why we need Congress to play a leading role in providing guidance and clarity for not just stablecoins as is recommended by the PWG [President’s Working Group on Financial Markets] report, but crypto broadly ASAP.”

Ripple general counsel Stuart Alderoty says that while some members of Congress are ready to act, the government’s hesitation is causing the US to fall behind other economic powers.

“This shouldn’t be a partisan issue, and some in Congress are seeking to take on the mantle. Unfortunately, while the US (as a whole) flounders, other respected economic centers are seizing the advantage – to name just one, the EU with MiCA [Regulation of Markets in Crypto-assets], taking input from all stakeholders.”

As Ripple’s legal battles rage on, a federal judge recently denied a motion by XRP holders to intervene on the company’s behalf in the lawsuit against the SEC over the categorization of XRP as a security. However, the judge did grant them the ability to file amicus briefs.

According to Alderoty, this appears to be a slight against XRP holders.

“XRP holders have always said that the SEC’s lawsuit is a direct attack on them. Now it’s official.”

XRP is exchanging hands at $1.16 at time of writing, according to CoinGecko.

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SEC Extends Decision Timeline Of Four Bitcoin ETFs By 45 Days

Bitcoin EFT applications are piling up as the United States Securities and Exchange Commission (SEC) continues weighing its options. Wall street’s most powerful regulator has once again extended the timeline on making decisions as to whether or not it will approve Bitcoin Exchange-Traded Funds (ETF). The commission extended the deadlines on four applications by 45 days.

The first decision on a proposed rule change that would allow the listing and trading of Bitcoin ETF has been put off till November.

New Deadlines Set By SEC

Global X Bitcoin Trust, Valkyrie XBTO Bitcoin Futures Fund, WisdomTree Bitcoin Trust, and Kryptoin Bitcoin ETF are the four Bitcoin ETFs awaiting the Commission’s decision. The approval was rescheduled to November 21, December 8, December 11, and December 24, respectively.

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“The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and any comments,” the SEC stated in an official statement.

On September 8, the SEC released a statement announcing that it was extending its decision to approve VanEck Bitcoin Trust by 60 days to November 14. On April 28, the SEC had said that its ruling on VanEck’s filing would come in June at the earliest. This was just hours before a previous deadline. VanEck’s filing launched the sprint by companies toward filing for bitcoin ETF approvals.

Related Reading | Will The SEC Approve A Bitcoin Futures ETF In 2021? Here Are The Implications

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SEC Chairman Gary Gensler has been moving aggressively to impose tougher restrictions on cryptocurrency. In a recent interview with the Washington Post, he compared stablecoins to poker chips. However, he has indicated that he is more open to cryptocurrency ETFs, suggesting those that comply with strict rules for mutual funds could provide investor protection.

Bitcoin Exchange-Traded Funds In The U.S.

Exchange-traded fund managers have been eager to jump on the cryptocurrencies trading wagon. However, they may be waiting longer than expected after comments from the Securities and Exchange Commission Chairman Gary Gensler damped hopes of quick approval of bitcoin ETFs this year.

Gensler has previously highlighted his concerns about careless oversight, and his stance indicates that the commission wants to impose stricter regulations on cryptocurrencies before approving a list of bitcoin ETF applications. A growing amount of ethereum ETFs have joined the application waitlist, following filings for approval by VanEck and WisdomTree in May. The SEC rejected some earlier bitcoin ETF applications.

Related Reading | How the SEC “dug into a hole” by not approving a Bitcoin ETF

In a June 16 release, the regulators said that they would take additional time to seek comments from the public. The SEC specifically asked investors for their opinions on bitcoin ETFs.

In early September, Fidelity Digital Assets met with the regulators privately to push for the approval of their proposed bitcoin exchange-traded fund. They argued the cryptocurrency market is now big enough to support it. The investment firm’s president, Tom Jessop, and other executives attended a virtual meeting with the regulator on September 8, according to a presentation that lays out the investor demand for the product.

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The securities regulator is currently considering applications from more than 20 companies. It is expected that the introduction of the first Bitcoin EFT by the SEC will raise the asset’s technical indicators with the entry of traditional investors into the market.

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SEC Chair Gary Gensler Asks Congress to Regulate Crypto Exchanges

Gary Gensler, the newly appointed chairman of the US Securities and Exchange Commission, has requested that the US Congress make some major decisions regarding cryptocurrency regulation. 

The SEC chair addressed this during a hearing hosted by the House Financial Service Committee, where market volatility surrounding the GameStop stock price jump witnessed early this year was discussed.

Gensler made such comments as a response to a question asked by Rep. Patrick McHenry about what the SEC would do to ensure that the crypto industry remains compliant with the law and conforms with legitimate use cases.

Gensler responded that US investors lack protection when they trade Bitcoin on crypto exchanges. He therefore asked US Congress to consider upping investor protection for crypto exchanges. 

Gensler stated that since crypto exchanges do not have a regulatory framework provided by the SEC or the Commodity Futures Trading Commission (CFTC), US Congress was the one responsible for instilling greater investor confidence through regulating crypto exchanges.

Although the SEC’s authority involves regulating digital assets that the regulator considers securities, Bitcoin does not fall under this category. 

Gensler stated that Bitcoin is a commodity under US law and is not subject to the SEC’s oversight. He said:

“There’s a lot of authority that the SEC currently has in the securities space, and there are a number of cryptocurrencies that fall within that jurisdiction. But there are some areas, particularly Bitcoin trading on large exchanges, that the public is not currently really protected.” 

Without a strong market regulatory oversight on crypto exchanges, Gensler said that there is no protection against manipulation or fraud. He said that the 2 trillion crypto market could benefit from greater investor protection and therefore suggested that Congress play an active role in bringing greater regulatory clarity, especially around exchanges. Gensler said:

“It’s only Congress that can really address it. It would be good to consider whether to bring greater investor protection to the crypto exchanges.” 

Regarding the GameStop frenzy, Gensler talked about the role of online communities such as Reddit in boosting stock prices. He however stated that he is not interested in curtailing the freedom of expression, but rather that he was more interested in seeing whether malicious actors took advantage of such communities to manipulate markets.  

He disclosed that the SEC plans to release a report this summer evaluating the GameStop trading craze and the reaction to it.

Fixing Gaps in Crypto Industry

Gensler was sworn in as the chairman of the SEC last month. During his nomination, he suggested that more government oversights of crypto assets will be coming. His appointment could have a significant impact on the cryptocurrency industry. Crypto advocates have projected that under his leadership, the US could see a Bitcoin ETF approval and the much-needed regulatory clarity in the field of digital assets.  

As a former Commodity Futures Trading Commission chairman and former Goldman Sachs investment banker, Gensler has a great wealth of experience to serve as SEC chairman. What sets him apart from his predecessors is that Gensler is the first blockchain technology and crypto expert to head the SEC. He was a professor who taught the course “Blockchain and Money” at the MIT Sloan School of Management and he regards Bitcoin as a “catalyst for change.”

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