Sebastian Sinclair

Despite relatively muted trading in the digital assets market following Memorial Day celebrations in the US, bitcoin has managed to eke out its highest point in almost three weeks, driving crypto-related equities higher.



The world’s largest crypto (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) poked above $28,000 on Sunday and Monday, clawing back losses from last week’s low of $25,800, data from <a href="https://www.blockworksresearch.com/assets" target="_blank" rel="noreferrer noopener">Blockworks Research</a> shows.



Even in the face of rising valuations for digital assets this week, bitcoin appears to be closing in on its first monthly loss since December of last year.



The impact of that outcome might not be as widely felt, however, as the narrative surrounding the US debt ceiling finds a <a href="https://edition.cnn.com/2023/05/27/politics/whats-in-the-debt-ceiling-deal/index.html" target="_blank" rel="noreferrer noopener">potential resolution</a> and <a href="https://blockworks.co/news/hong-kong-to-lift-crypto-ban">Hong Kong</a> allows retail investors to find <a href="https://blockworks.co/news/crypto-exchanges-hong-kong">fresh investment opportunities</a>.



If pre-market trading is any indication of how crypto may react in the coming days, coming off the back of a long weekend, the market may be in for increased volatility.



Publicly-listed US exchange Coinbase stock (COIN) was up 3.9% to $59 on Tuesday in pre-market trade, alongside Marathon Digital, a bitcoin miner — good for 5.8% to $9.52 per share, data shows.



There’s also one day left for the month of May, so it’s still possible that traders may drive up prices and cement bitcoin’s fifth consecutive month in the green.&nbsp;



The asset would need to close above $30,000 in order not to break its current winning streak — a feat not entirely out of the question given its past performance, according to crypto service provider Matrixport.



“Many investors were scared about the debt ceiling and the potential default by the US government,” Matrixport wrote in a recent <a href="https://www.matrixport.com/institutions/research/daily-insights/351" target="_blank" rel="noreferrer noopener">research note</a>. “Now, they will need to find something else to be bearish about, as the market likely rallies.”



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Crypto Equities Rise in Pre-Market Trade as Bitcoin Hits 3-Week High

Casey Wagner

<div id="highlights-block_62b36fa9dc584" class="highlights">
 <ul>
 <li>Voyager reveals Three Arrows Capital is at risk for defaulting on a $657 million loan</li>
 <li>The sell-off comes as senators weigh likelihood of a recession</li>
 </ul>
 
</div>



Crypto-related equities fell Wednesday — along with the broader market — as investors continue to parse contagion risks from lending firm Celsius’ <a href="https://cms.blockworks.co/celsius-says-it-needs-more-time-to-recover-financial-position/" target="_blank" rel="noreferrer noopener">liquidity crisis</a>. 



“Unfortunately, crypto equities are going to get penalized if either crypto or tech, or both, are down,” said David Tawil, president and co-founder of Prochain Capital. “However, I expect that the same will be true to the upside, eventually…if we are at or near a bottom in crypto and/or equities, I think that it&#8217;s a good entry point.”&nbsp;



Crypto broker <a href="https://www.investvoyager.com" target="_blank" rel="noreferrer noopener">Voyager Digital</a> led the decline, at one point losing as much as 60% during Wednesday’s trading session, following its disclosure that the company had <a href="https://cms.blockworks.co/three-arrows-capital-brink-default-owes-voyager-657m/" target="_blank" rel="noreferrer noopener">exposure to</a> potentially insolvent hedge fund Three Arrows Capital.



Voyager said Three Arrows currently has an outstanding loan of around $657 million, and the broker may issue a default if the full amount is not paid by June 27.&nbsp;



“This new revelation may have some investors wondering if these unscrupulous business practices between lender and borrower are commonplace in the industry, with further trouble yet to be announced,” said Josh Olszewicz, head of research at crypto fund manager Valkyrie Investments. “Multiple crypto lenders reporting liquidity issues over the past few weeks has also bred fear in the market broadly and led to a general contraction in available credit.”



Exchange Coinbase, business intelligence firm MicroStrategy and digital asset mining company Marathon Digital also all posted losses Wednesday. Coinbase at one point lost 7% while Microstrategy, which has been <a href="https://cms.blockworks.co/crypto-related-stocks-are-down-including-michael-saylors-microstrategy/" target="_blank" rel="noreferrer noopener">trending down</a> for several months, shed as much as 8.5%.



The sell-off comes as markets react to Federal Reserve Chair Jerome Powell’s testimony before the US Senate Banking Committee Wednesday. If interest rates increase at a steep pace too quickly, senators warned, a recession could be the result.&nbsp;



“It’s certainly a possibility, it’s not our intended outcome at all,” Powell said. &#8220;We are not trying to provoke, and I don&#8217;t think we will need to provoke, a recession.”&nbsp;



Market turmoil is not expected to let up until a shift in monetary policy occurs, analysts said.&nbsp;



“Fading stock market bounces will still remain the go-to trade on Wall Street until the economic data dramatically weakens and the Fed pivots so that they may ease up their tightening of policy strategy,” Edward Moya, senior market analyst at OANDA, said.



For crypto-related equities, specifically, Tawil added that contagion fears need to be eased first and foremost.&nbsp;



“The market definitely needs to see at least one week without any additional blow ups or fissures to declare that the contagion is over,” Tawil said. “Deleveraging will continue, and there will continue to be weakness in enterprises with remaining questions of stability, but the forced selling for this round will be over.”


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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Voyager Digital’s 60% Slide Leads the Sell-off for Crypto Equities

Ben Strack

<div id="highlights-block_61eb36bba2579" class="highlights">
 <ul>
 <li>The iShares Blockchain and Tech ETF would track the NYSE FactSet Global Blockchain Technologies Index</li>
 <li>BlackRock CEO Larry Fink said in October he sees “huge opportunities” for digital currency</li>
 </ul>
 
</div>



The world’s largest asset manager has an ETF in the works that would focus on blockchain technology.&nbsp;



The filing comes as crypto markets have cratered, with bitcoin dropping 10.8% to $36,900 as of Friday evening. The iShares Blockchain and Tech ETF would track the investment results of the NYSE FactSet Global Blockchain Technologies Index, according to <a href="https://www.sec.gov/Archives/edgar/data/1100663/000119312522014777/d286885d485apos.htm">a Friday regulatory disclosure</a>.



The index consists of companies involved in the development and deployment of crypto technologies in the US and abroad.



The proposed fund plans to invest at least 80% of its assets in stocks included in the index, according to the filing. It may allocate up to 20% in futures, options, swap contracts, cash and cash equivalents — all on equities. The fund will not invest in crypto directly or indirectly via crypto derivatives.&nbsp;



The disclosure did not indicate a ticker or expense ratio for the planned offering.&nbsp;



A spokesperson for the company declined to comment beyond the filing.&nbsp;



Investors have clamored for ETFs with ties to crypto in <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/">the absence of a spot bitcoin ETF</a>. The largest such offering on the market is Amplify Investments’ Transformational Data Sharing ETF (BLOK), which has grown to $1.1 billion of assets since its January 2018 launch.



“iShares filing for a blockchain ETF was inevitable given their focus on mega-trends and that the universe of companies continues to expand,” Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, said in a Twitter post.&nbsp;



BlackRock has nearly 400 iShares ETFs trading in the US, with combined assets under management of roughly $2.4 trillion. The firm’s total AUM totals about $10 trillion.



The asset manager revealed in January 2021 that its Strategic Income Opportunities Fund (BASIX) and its Global Allocation Fund (MDLOX) <a href="https://cms.blockworks.co/which-mutual-funds-etfs-are-making-crypto-related-investments/">could invest</a> in cash-settled bitcoin futures traded on commodity exchanges registered with the Commodity Futures Trading Commission (CFTC).



CEO Larry Fink <a href="https://cms.blockworks.co/blackrock-ceo-sees-huge-opportunities-in-digital-currency/">told CNBC in October</a> that while he sees “huge opportunities” for digital currency, he is unsure how the crypto space will fare over the long term.&nbsp;



<a href="https://cms.blockworks.co/blackrock-ceo-clients-not-asking-about-crypto/">In a July earnings call,</a> Fink told investors that he believed crypto could one day become an asset class, but long-term investors were not asking the firm about crypto’s fit in their portfolios.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.