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Ether (ETH) jumped above $3,500 ahead of the spot exchange-traded funds (ETFs) that are expected to go live for trading on Tuesday, one that some onlookers say could see muted inflows in their first few weeks. “Market participants are also closely monitoring Grayscale's US$9 billion ETH Trust, as there are concerns that Grayscale's potential selling pressure could counteract the positive effects of the new inflows, potentially exerting downward pressure on the market,” wrote Vivien Wong, partner at HashKey Capital’s Liquid Funds, in a Tuesday email to CoinDesk. Wong’s HashKey helped launch one of the Ether ETFs in Hong Kong. It estimates that inflow will hit $3 billion in the first six months of trading in the U.S., citing bitcoin’s market cap being 30% of Ether’s and the lack of staking. Ether’s inflation rate, which increases token supply in the open market, is also a point of concern. “Over the past month, the ETH supply increased by around approximately 60k ETH, contrary to expectations,” Wong said. “While the ETH supply has decreased by approximately 300k ETH since the merge, continued inflation at this rate could negate this reduction within six months, potentially turning ETH into an inflationary asset again.” |
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DYdX Compromised Ahead of Sale |
Decentralized crypto-exchange giant dYdX said Tuesday that one of its on-chain trading services has been "compromised" and warned users against visiting dydx.exchange until further notice. Specifically, the website for dYdX v3, an older version of its trading platform that averages around $1.5 billion in weekly derivatives trading volume, "has been compromised," per a tweet. The attack does not appear to impact funds traders already have on dYdX, as only the web domain, and not the underlying smart contracts, appear to be being targeted, according to statements in dYdX's Discord server. |
Indian Taxes Still Controversial |
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India's Finance Minister Nirmala Sitharaman kept crypto tax rules unchanged in her address announcing the nation's budget for 2024-2025 on Tuesday. This was expected, as CoinDesk reported on Monday. The primary demand from India's crypto industry was to reduce the controversial tax-deducted-at-source (TDS) policy on crypto transactions from 1% to 0.01%. It made its representations to government officials with evidence from several sources, including a think tank study that provided evidence to support a reduction in the TDS. The industry also asked the government to establish progressive taxes on gains instead of the flat 30% rate, and allowing losses to offset gains. They have also pushed for multi-agency regulation. "We were hoping for some relaxation to the taxation framework on VDAs (Virtual Digital Assets) in this budget, but the absence of any announcement is not particularly disheartening, given the Govt's overall negative stance towards the sector," said Dilip Chenoy, Chairperson, Bharat Web3 Association, adding that they would "continue to push for rationalization of the taxation framework." |
Kevin O'Leary on ETFs and Gary Gensler |
Kevin O 'Leary, chairman of O'Leary Ventures and "Mr. Wonderful" on "Shark Tank," spoke with CoinDesk's Jennifer Sanasie. The following is a lightly edited transcript of their interview. Jennifer Sanasie: Alright, I gotta talk about that background. It just looks so lovely. What? Where? Are you sitting by a pool right now? Kevin O'Leary: It's right behind me, it's the Hamptons. I thought it would celebrate a summertime moment. It's a great summer we're having, in particular with crypto policy, so why not enjoy? JS: Exactly. I am completely with you. Well, honestly, it sounds like you've been having a really fun summer. I saw you on stage on Twitter with the Jeff Tuohy band on X just living life, Kevin. KO: Yeah, I do that every year with Jeff’s band, keeps my chops up. He gets better and better. And of course we celebrate that. I do a lunch every July 5 with Jamie, who started Ring, a very famous Shark Tank deal that got away. He sold it to Amazon for $1.2 billion. We've become very close friends. We got our families together and then we went to Cisco Brewery and then I jam on stage. It's a great time. It's just a celebration of the 4th. JS: I'm so happy you brought up Ring because I got to ask you about some of your best and worst investments. Did you invest in Ring? KO: No, I was the only shark to make him an offer. I thought there'd be a lot of dilution and consequent rounds over and over again. I offered him $600,000 in debt with 2.5% warrants – non-dilutive warrants. He didn't take that offer. I understand why, but at least he got one. It would have been the biggest outcome in Shark Tank history, but you can't win them all. JS: It would have been a good one. When you think back, not only to Shark Tank history, but to your career, what's the worst investment you've ever made? KO: Well, I've made a lot of bad investments, but I've gotten better from experience and I've learned something interesting. I guess I would call it intuition over time. When you're writing a check and making an investment and it doesn't feel right in your stomach, that's because it isn't and it's going to go to zero and it does. And I've done that to myself a few times, but now I listen to my innergut on this, which I think is just years of experience. And if it doesn't feel right, I don't do it. And it's, I've been very fortunate, you know, I don't get it right all the time, but I get it right enough that it's, it's been an interesting ride. And it's really your winners that define your success. And I will say one thing about investing to everybody, cause I've been doing this a long time. Let's say I do 10 deals. I'll do, I'll probably do 17 deals. The ones I think are gonna be the winners are never the winners. It's the ones that I think, "that's a flyer," that five years later I get 100X, 200X, 300X on. You just don't know, which is why you need that diversification in your strategy. You need to do more than one, particularly if you're talking about venture capital. That's what we're talking about here. I don't just do venture, I do private equity, I do debt, I do other things. But on the venture portfolio, it's high risk and you need diversification. |
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Being Compliant is the Key: Understanding the Growth of Fastex There’s a new art gallery in Yerevan, Armenia. You’ll find a sleek space, tasteful lighting, and creative works of art. Sculptures that look like eyeballs are emblazoned with bursts of color — fiery reds, bold yellows, soothing blues. But there’s a twist. Each eyeball is linked to a corresponding NFT, meaning it’s a blend of the physical and the digital. The art galleries are “phygital.” Continue reading. |
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The Takeaway: ETH ETFs - 4 Questions |
Guest post by George Kaloudis, CoinDesk senior analyst: Exchange-traded funds tied to Ethereum's ether (ETH) could begin trading as early as Tuesday. The debut has been much expected by traders looking for a new market “narrative.” But the exact impact is hard to predict.
Here are four things to watch for.
Price impact? What will the ether ETF do to the price of the underlying asset? What about the price of bitcoin? What about the rest of the cryptocurrency market? Since the spot bitcoin ETF commenced trading in the U.S. in January, bitcoin has jumped 56% and ether 38%. Should we expect the same type of price shock from the ether ETF? Will ether go up? Will bitcoin too? Will other cryptocurrencies follow suit? Adoption increase? When the ether ETF begins trading, more traditional-type investors may get price exposure to ether, but will their financial buy-in do anything to spur on adoption of the Ethereum network? The ETFs will undoubtedly bring validity to the asset in the eyes of traditional investors. But is there a straight (or even curved) line from a financial advisor buying the ether ETF in an IRA for a client to the advisor eventually staking their ether to the advisor buying the latest and greatest ERC-20 memecoin? I think that’s possible, but I wouldn’t bet on it as, anecdotally, I find that people care about price first, and second, and third, and foremost.
What of the SEC? I expected cryptocurrencies to be shoved into ETFs because the Securities and Exchange Commission (SEC) always thought these assets were securities, and there are plenty of ETFs filled with securities. Nonetheless, the SEC has been outright combative toward crypto. Will that change with the ether ETF? The SEC did just recently drop their case against Consensys after the Ethereum software company sued the SEC in April, alleging that the regulator was investigating whether Ethereum, post-Merge, might be a security. So maybe we’ll see an environment where the SEC stops meddling. That, or maybe the ETF makes it even more clear that ether is in fact a security and SEC tightens the screws. What is the investor base for the ether ETF? In general, fans of Ethereum are more crypto polytheists than fans of Bitcoin are, supporting a “multi-chain future.” And so, while I suspect there to be overlap of investor bases for the bitcoin ETF and the ether ETF, I’m not sure what to make of the average ether ETF investor.
Are we getting family offices and hedge funds looking for asymmetric gains? Old school financial advisors looking to somehow combat inflation? Degenerate 25 year olds trying to make huge gains so they can retire early and travel the world while they still have their youth? Is this the ether ETF strictly for institutional play while retail investors will stick to holding their ether in Coinbase or Robinhood?
And who will lead the pack from the issuer side? Will BlackRock reign as the capital inflow leader with the ether ETF too? Probably, and whether this is bad or good is a story time will tell starting Tuesday. |
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