Ark

Crypto acted as safe haven amid SVB and Signature bank run: Cathie Wood

Cathie Wood said the ongoing banking crisis is a total Fed policy failure and could have been averted with crypto’s decentralized solutions.

Amid all the chaos around multiple bank runs in the United States, Cathie Wood, CEO of asset management firm ARK Invest, said cryptocurrencies acted as a safe haven amid the ongoing banking crisis in the United States. She blamed the recent downfall of the likes of Silicon Valley Bank (SVB), Signature and others on the Fed’s policy failure.

Cryptocurrency prices shot up in double digits, with Bitcoin (BTC) and Ether (ETH) touching new multimonth highs amid the U.S. banking crisis.

In a Twitter thread on March 16, Wood criticized the Federal Reserve’s inability to avert bank runs despite all the signs being there. She said she was “baffled that banks and regulators could not convince the Fed that disaster loomed.” She argued that the Fed policy was the primary culprit for the ongoing banking crisis due to a venture capital funding drought.

Pointing toward the asset-to-liability mismatch, which, although typical in most circumstances for banks, was untenable in the current scenario, with deposits leaving the banking system for the first time since the 1930s. Securities earnings for banks were only 1–2% against deposits paying 3–5%, which eventually became untenable as deposits started leaving the system. Like SVB, some banks were forced to sell held-to-maturity securities, recognizing losses that depleted their equity accounts.

Wood also reminded everyone that the ongoing crisis wasn’t forced by cryptocurrency, with the ecosystem under heavy scrutiny since FTX’s downfall, leading to a severe regulatory crackdown. Wood said that regulators are using crypto as a scapegoat for their own lapses in oversight of traditional banking.

Wood has long been a known crypto proponent, often reflected in her company’s investment in emerging markets — especially crypto. She noted that the current banking crisis would not have been possible in the decentralized, transparent, auditable and overcollateralized crypto asset ecosystem.

Related: US credit crunch means it’s time to buy gold and Bitcoin: Novogratz

Wood projected crypto as a solution to the central points of failure, the opacity and the regulatory mistakes in the traditional financial system. As the scapegoat for policy mistakes, crypto will move offshore, depriving the U.S. of one of the most important innovations in history.

Coinbase still a buy for Cathie Wood: ARK buys its biggest batch of COIN in 2023

Amid the crypto market facing another wave of panic, Cathie Wood’s ARKK keeps bagging record amounts of Coinbase stock this year.

Amid Coinbase, which trades as COIN, tumbling about 8% on Thursday, Cathie Wood’s investment manager ARK Invest bought the biggest amount of the stock since the start of 2023.

On March 9, ARK purchased 301,437 Coinbase shares ($17.5 million) for its ARK Innovation exchange-traded fund, known as ARKK, according to an investor notification seen by Cointelegraph. The company has also bought 52,525 Coinbase shares ($3 million) for its ARK Next Generation Internet ETF, referred to as ARKW.

ARK’s latest investments comprise the largest single Coinbase stock acquisition in 2023, accounting for roughly 30% of all Coinbase purchases in 2023. The amount significantly exceeds ARK’s total Coinbase stock buys of around $13 million in January. Wood’s investment firm bagged $42 million worth of Coinbase stock in February.

In addition to Coinbase, ARK has been actively buying Robinhood stock. On March 9, the company purchased another 265,566 Robinhood shares ($2.5 million) for its ARKK fund. The purchase came shortly after ARK packed similar amounts of Robinhood shares, buying 268,086 ($2.5 million) and 219,883 ($2.1 million) on March 8 and 6, respectively.

Related: Silvergate reportedly talks with FDIC on ways to avoid shutdown

The news comes amid reports suggesting that ARK has earned more than 70% of its $310 million fees since ARKK’s price plummeted by 76% since its all-time high in February 2021. In 2023, ARK earned an average of roughly $230,000 in fees daily as the fund’s value slightly recovered — surging from around $30 in early January to $37.3 in mid-March.

ARK Innovation ETF (ARKK) historical price chart. Source: TradingView

The new Coinbase stock purchase further reaffirms the company’s bullish sentiment toward the cryptocurrency industry and Bitcoin (BTC). Focused on technology innovations like self-driving cars and genomics, ARK Invest founder Wood is one of the biggest crypto bulls in the world, believing that Bitcoin will hit $1 million in the not-so-distant future due to its promising potential as a risk-on asset.

The latest bullish investments came despite the crypto market facing another wave of panic due to Silvergate crypto bank announcing plans to wind down operations and liquidate the bank. On March 10, Bitcoin dipped below $20,000 for the first time since early January.

$475M in Bitcoin options expire this week — Are bulls or bears poised to win?

BTC futures data shows bulls are not sure that Bitcoin price will hold above $24,000, but range-bound action could help them profit from Aug. 12’s $475 million options expiry.

Bitcoin (BTC) has been posting higher lows for the past eight weeks, but during this time, BTC has not been able to flip the $24,000 resistance to support on at least three different opportunities. This is precisely why the $475 million Bitcoin options expiry on Aug. 12 might be a game changer for bulls.

Considering the current regulatory pressures in play, there seems to be a good enough rationale for avoiding bullish bets, especially after the U.S. Securities and Exchange Commission pressed charges against a former Coinbase manager for illegal securities trading on July 21.

The additional impact from the Terra (Luna) — now renamed Terra Classic (LUNC) — ecosystem imploding and subsequent crypto venture capital firm Three Arrows Capital (3AC) registering for bankruptcy continue to weigh on the markets. The latest victim is crypto lending platform Hodlnaut, which suspended user withdrawals on Aug. 8.

For this reason, most traders are holding back their bets above $24,000, but events outside of the crypto market might have also negatively impacted investors’ expectations. For example, according to regulatory filings released on Aug. 9, Elon Musk sold $6.9 billion worth of Tesla stock.

Moreover, on Aug. 8, Ark Investment manager CEO Cathie Wood explained that the 1.41 million Coinbase (COIN) shares sold in July were caused by regulatory uncertainty and its potential impact on the crypto exchange’s business model.

Most bearish bets are below $23,000

Bitcoin’s failure to break below $21,000 on July 27 surprised bears because only 8% of the put (sell) options for Aug. 12 have been placed above $23,000. Thus, Bitcoin bulls are better positioned for the $475 million weekly options expiry.

Bitcoin options aggregate open interest for Aug. 12. Source: CoinGlass

A broader view using the 1.23 call-to-put ratio shows more bullish bets because the call (buy) open interest stands at $262 million against the $212 million put (sell) options. Nevertheless, as Bitcoin currently stands above $23,000, most bearish bets will likely become worthless.

If Bitcoin’s price remains above $23,000 at 8:00 am UTC on Aug. 12, only $16 million worth of these put (sell) options will be available. This difference happens because there is no use in the right to sell Bitcoin at $23,000 if it trades above that level on expiry.

Bulls could pocket a $150 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Aug. 12 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

  • Between $21,000 and $22,000: 70 calls vs. 4,200 puts. The net result favors bears by $90 million.
  • Between $22,000 and $24,000: 1,600 calls vs. 1,460 puts. The net result is balanced between bulls and bears.
  • Between $24,000 and $25,000: 3,700 calls vs. 120 puts. The net result favors bulls by $90 million.
  • Between $25,000 and $26,000: 5,900 calls vs. 30 puts. Bulls increase their gains to $150 million.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

Related: Bitcoin braces for US inflation data as CPI nerves halt BTC price gains

Futures markets show bulls are less inclined to show strength

Bitcoin bears need to pressure the price below $24,000 on Aug. 12 to balance the scales and avoid a potential $150 million loss. However, Bitcoin bulls got $265 million worth of leverage long futures positions liquidated between Aug. 8 and 9, so they are less inclined to push the price higher in the short term.

With that said, the most probable scenario for Aug. 12 is the $22,000 to $24,000 range, providing a balanced outcome between bulls and bears. Considering Bitcoin’s negative 50% performance year-to-date, even a small $90 million win for bulls could be regarded as a victory, but that would require sustaining BTC above $24,000.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bitcoin mining to harness onsite natural gas emissions: Ark Invest

A new report reveals an angle for sustainability in Bitcoin mining through harnessing onsite natural gas emissions.

Data from a recent Ark Invest report highlights another utility for Bitcoin (BTC) mining in the realm of sustainability and energy. 

According to the findings, there is enormous potential to transform methane emissions into energy for Bitcoin mining, which, in turn, will turbocharge solar and wind-generated electricity at onsite wells.

Annual gas flaring emissions equal 140 billion cubic meters, along with an additional 125 billion cubic meters in annual methane emissions. Therefore, left untouched, this means 265 billion cubic meters of natural gas emissions are wasted yearly. However, an analysis of the methane needed for the current Bitcoin hashrate stands at only 25 billion.

While harnessing the entirety of the emissions is impossible due to the oil industry’s preexisting flaring operations investments, capturing methane is a viable and early solution. Ark Invest’s Sam Korus tweeted that over half of all vented methane occurs onsite at wells. This makes the location a prime spot for mining to capture such emissions and productively employ them.

Additionally, instead of the methane being vented, it would be able to generate electricity at rates far below what mining companies currently pay.

Recently, the mining industry has been showing signs of increased energy efficiency and a pivot towards sustainability.

Last week, the Bitcoin Mining Council released its Q2 review of the network. It revealed the industry’s use of sustainable energy is up 6% from the same quarter in the previous years. In the conclusion to their findings, the council referred to Bitcoin mining as “one of the most sustainable industries globally.”

However, this has been an active effort to change on the part of the mining industry. Previously, environmentalists shamed the industry due to its unjustifiable carbon footprint.

Korus suggests that while there are other ways to harness methane, Bitcoin mining is an ideal option as “It is highly scalable with modular hardware that can be transported to and shifted among operating well sites.”

While the new data backs up these claims, they are not new. There are already companies actively doing so. Back in February, Cointelegraph spoke with Kristian Csepcsa, the chief marketing officer of Slush Pool, on how miners are aiding oil companies with flare reduction by running their generators on natural gas, which would otherwise be burned off.

Nonetheless, there are still skeptics. One Twitter user pointed out that the emissions in question are not naturally occurring. Rather, they are extracted via fossil fuel extraction, which due to climate change, is under pressure to be cut entirely.

As the industry continues to adapt to global sustainability standards, time will tell if such solutions will bring about the future of Bitcoin mining and energy production.

SEC extends window to decide on ARK 21Shares spot Bitcoin ETF to August

J. Matthew DeLesDernier, assistant secretary for the SEC, said it had extended to allow for “sufficient time to consider the proposed rule change and the issues raised therein.”

The United States Securities and Exchange Commission (SEC) has pushed the deadline to approve or disapprove ARK 21Shares’ Bitcoin exchange-traded fund (ETF) to August 30.

According to a Tuesday filing from the SEC, the regulatory body extended the deadline for approving or disapproving the ARK 21Shares spot Bitcoin (BTC) ETF from July 16 for an additional 45 days to August 30. The application, originally filed with the SEC in May and published for comment in the Federal Register on June 1, includes a proposed rule change from the Chicago Board Options Exchange BZX Exchange.

Ark Invest partnered with Europe-based ETF issuer 21Shares to file for a spot Bitcoin ETF listed on Cboe BZX Exchange in 2021, but the SEC rejected its application in April. Under current rules, the regulatory body is able to delay its decision and open the investment offering to public comment for up to 180 days, suggesting that the SEC could provide a final answer by January 2023.

In the notice of the designation of a longer period, SEC assistant secretary J. Matthew DeLesDernier said it had chosen an extension to allow for “sufficient time to consider the proposed rule change and the issues raised therein.” The SEC has never approved an ETF with direct exposure to crypto but gave the green light to investment vehicles linked to BTC futures, including funds from Valkyrie and ProShares.

Related: Grayscale legal officer says Bitcoin ETF litigation could take two years

In June, when the SEC denied Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot BTC ETF, the investment manager filed a petition for courts to review the regulatory body’s decision. Grayscale senior legal strategist Donald Verrilli alleged in the filing that the SEC had acted “arbitrarily and capriciously” by “failing to apply consistent treatment to similar investment vehicles.”