As the December 29 deadline set by the United States Securities and Exchange Commission (SEC) fast approaches, applicants for a spot Bitcoin exchange-traded fund (ETF) are in a race against time to finalize their filings. This critical deadline, reported by Reuters and confirmed by public memos and insiders, is pivotal for firms hoping to be part of the first wave of spot Bitcoin ETF approvals slated for early January 2024.

Bloomberg’s analysis of the 2023 cryptocurrency market reveals a dramatic shift from the previous year’s downturn, with Bitcoin leading a significant market resurgence. After a $1.5 trillion market wipeout in 2022, Bitcoin’s value soared by over 160% in 2023, adding about $530 billion to its market capitalization. This bullish trend was mirrored in smaller tokens, including Solana, where a $100,000 investment at the beginning of the year would have grown to over $800,000.

The Bitcoin network’s mining power, measured by its hash rate, achieved a historic high on Christmas Day, leading to increased challenges for miners in the face of declining profitability. Data from Blockchain.com revealed that the hash rate soared to 544 exahashes per second (EH/s), a milestone also noted by Bitinfocharts over the same weekend.

Top stories in the Crypto Roundup today:

• Spot Bitcoin ETF Filings Rush to Meet U.S. SEC’s Deadline
• Bloomberg: 2023 Crypto Surge Driven by Anticipated US Bitcoin ETF Approval
• Bitcoin’s Mining Power Reaches New High, Impacting Miner Profitability

Spot Bitcoin ETF Filings Rush to Meet U.S. SEC’s Deadline

As the December 29 deadline set by the United States Securities and Exchange Commission (SEC) fast approaches, applicants for a spot Bitcoin exchange-traded fund (ETF) are in a race against time to finalize their filings. This critical deadline, reported by Reuters and confirmed by public memos and insiders, is pivotal for firms hoping to be part of the first wave of spot Bitcoin ETF approvals slated for early January 2024.

On December 21, SEC officials met with representatives from at least seven firms, including BlackRock, Grayscale Investments, ARK Invest, and 21 Shares, to discuss the launch of spot Bitcoin ETFs. These meetings, which also featured representatives from potential listing exchanges like Nasdaq and the Chicago Board Options Exchange, underscored the significance of the upcoming deadline.

Fox Business journalist Eleanor Terrett, one of the first to report on this deadline, emphasized that only applications completed and filed by December 29 would be considered for early approval. The SEC has made it clear that filings mentioning in-kind creation, involving non-monetary payments like Bitcoin, will be rejected. In response, many applicants are updating their S-1 filings to a cash redemption model, moving away from in-kind redemptions.

Apart from the cash-only requirement, the SEC is also insisting that Bitcoin ETF filers name their authorized participants (AP) in the filings. Bloomberg ETF analyst Eric Balchunas highlighted that securing an AP agreement is a crucial step toward approval. As of December 22, none of the filers had an AP agreement in place, though seven firms had already switched to a strictly cash redemption model.

Bloomberg: 2023 Crypto Surge Driven by Anticipated US Bitcoin ETF Approval

Bloomberg’s analysis of the 2023 cryptocurrency market reveals a dramatic shift from the previous year’s downturn, with Bitcoin leading a significant market resurgence. After a $1.5 trillion market wipeout in 2022, Bitcoin’s value soared by over 160% in 2023, adding about $530 billion to its market capitalization. This bullish trend was mirrored in smaller tokens, including Solana, where a $100,000 investment at the beginning of the year would have grown to over $800,000.

A key driver of this optimism is the anticipation of the U.S. Securities and Exchange Commission approving the first Bitcoin exchange-traded fund (ETF). Michael Saylor of MicroStrategy Inc. highlighted to Bloomberg Television the potential impact of this approval, suggesting it could create a demand shock and provide a compliant investment channel for mainstream investors.

Despite the market’s recovery, challenges persist. Bloomberg points out the ongoing skepticism regarding the intrinsic value of cryptocurrencies and their association with criminal activities. The sector is still recovering from significant controversies, such as Binance’s $4.3 billion fine and the collapse of Sam Bankman-Fried’s FTX empire, which have impacted market liquidity.

Bitcoin’s performance in 2023 outshone stocks and gold, with companies like Coinbase Global Inc. and MicroStrategy benefiting from the market recovery. However, the decentralized finance sector and nonfungible token (NFT) markets are still recovering from previous setbacks. Bitcoin derivatives, including options and futures, saw increased activity, with Deribit and CME Group reaching landmark levels in open interest.

The anticipated halving event in 2024, expected to curb Bitcoin’s supply growth, alongside potential ETF demand, provides further optimism.

Bitcoin’s Mining Power Reaches New High, Impacting Miner Profitability

The Bitcoin network’s mining power, measured by its hash rate, achieved a historic high on Christmas Day, leading to increased challenges for miners in the face of declining profitability. Data from Blockchain.com revealed that the hash rate soared to 544 exahashes per second (EH/s), a milestone also noted by Bitinfocharts over the same weekend.

This development is part of a broader trend in 2023, where the network’s hash rates have more than doubled, showing a 130% increase since January. This period also saw Bitcoin’s price significantly rise, with an increase of over 150% since the start of the year.

Reflecting on the resilience of Bitcoin’s hash rate, especially following the mining ban in China in 2021, Will Clemente of Reflexivity Research pointed out the minimal impact of the ban on the network’s robustness. He emphasized the strength and security of Bitcoin as a decentralized and open-source monetary system.

The surge in hash rate, while theoretically beneficial for Bitcoin’s value, has created a tougher environment for miners. The increased difficulty in securing new blocks has directly affected their earnings.

According to HashrateIndex, the hash price, which indicates mining profitability, has recently decreased to $0.09 per terahashes per second per day. This represents a significant drop from its peak in 2023, highlighting the fluctuating nature of mining profitability, often influenced by market demand and transaction fees.

Glassnode analyst ‘Checkmatey’ highlighted the ongoing high transaction fee environment in the Bitcoin network, observing that the Bitcoin mempools haven’t been fully cleared for almost a year, indicating sustained fee pressure since February.

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