fidelity

Fidelity and SEC meet to discuss spot Bitcoin ETF application

The United States SEC and Fidelity met to discuss Fidelity’s Wise Origin Bitcoin Trust application, reviewing diagrams and the operational functionality of the product.

The United States Securities and Exchange Commission (SEC) recently met with Fidelity Investments to seek additional clarity on its spot Bitcoin (BTC) exchange-traded fund (ETF) application.

According to a filing published on Dec. 7, two Cboe BZX Exchange representatives, six SEC personnel and nine Fidelity personnel met to discuss the workings of the Wise Origin Bitcoin Trust.

The filing incorporated PowerPoint slides used during the meeting to illustrate the operational framework of the Bitcoin ETF.

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Ethereum price rallies toward key resistance but is ETH’s strength sustainable?

Ethereum’s price rally toward $2,100 is driven by new developments in the layer-2 space and investors’ anticipation of a spot BTC ETF.

Ether (ETH) is trading higher on Dec.

Ether 12-hour price index, USD. Source: TradingView

However, the current positive momentum is supported by several factors, including applications for spot ETFs and the expansion of Ethereum’s ecosystem, driven by layer-2 solutions.

ETH benefits from ETF expectations and negative news related to competing blockchains

A pivotal development occurred on Nov. Securities and Exchange Commission (SEC) initiating the review process for Fidelity’s spot Ether ETF proposal, filed on Nov.

Despite analysts predicting the SEC might delay its decision to early 2024, interim deadlines for applications by VanEck and ARK 21Shares on Dec.

The Ethereum network’s growth, especially in transaction activity and layer-2 development, is noteworthy.

This growth is reflected in Ethereum’s total value locked (TVL), which recently hit a two-month high of 13 million ETH, spurred by a 13% weekly gain in Spark and a 60% increase in Blast user deposits.

Ethereum network top DApps by TVL. Source: DefiLlama

In contrast, Tron, another leading blockchain in TVL terms, witnessed a 12% decline over the past ten days. Recent high-profile hacks linked to Tron’s founder Justin Sun have also swayed investor confidence toward Ethereum.

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MicroStrategy’s stock price more than doubles in 2023 in lockstep with Bitcoin

Bank of America and Fidelity have increased their MicroStrategy exposure in what appears to be a passive Bitcoin investment.

MicroStrategy’s bold Bitcoin (BTC) investment strategy is playing out profitably so far into 2023.

Today, MicroStrategy’s stock, MSTR, is up roughly 140% year-to-date (YTD) to $350 per share, its highest level since September last year. It mirrored Bitcoin’s 90% YTD gains, maintaining a strong positive correlation with the top cryptocurrency.

MSTR daily price chart featuring its daily correlation with BTC. Source: TradingView

Proxy Bitcoin investment boom

To recap, MicroStrategy is essentially a proxy for direct BTC investment without a spot Bitcoin exchange-traded fund (ETF) in the United States. It holds 140,000 BTC worth $4.26 billion, the most by a publicly traded company as a part of its treasury strategy.

MSTR investors typically get their buying or selling cues from the same catalysts that drive Bitcoin market trends.

As a result, the stock has mirrored the BTC price uptrend so far in 2023, led by rush-to-safety trades amid the U.S. banking crisis and anticipation that the Federal Reserve would stop hiking rates.

BTC/USD daily price chart. Source: TradingView

For instance, CNN data shows Bank of America’s entities owns 86,147 MSTR shares. Similarly, Fidelity purchased 97,199 MSTR shares throughout 2022, suggesting growing institutional interest in proxy Bitcoin investments.

Coinbase’s COIN, another stock offering indirect crypto exposure, has doubled in value this year as well.

MicroStrategy’s core business is unhealthy

MicroStrategy is essentially an enterprise software solution company and generates its revenue from software licensing and subscription services.

The firm realized a net loss of $193.7 million during Q4 2022, up from $137.5 million a year ago, led by a Bitcoin impairment loss of $197.6 million. Furthermore, its operating cash flow was $18.2 million compared to a positive cash flow of $3.2 million in the same quarter a year ago.

Of course, MicroStrategy could sell its Bitcoin holdings to boost its balance sheet reserves. But the company said it would not alter its BTC buying strategy under financial stress. Instead, it employs strategies like share dilutions and debt offerings to raise capital to buy BTC.

“The risk here will come from its inability to buy Bitcoin with positive cash flows in future quarters as per its strategy,” said Pacifica Yield, a financial blogger at Seeking Alpha, adding:

“Dilution to buy assets that you lose money on if Bitcoin returns to its near-term lows would not be a shareholder-friendly strategy.”

 20% correction for MSTR stock in Q2?

From a technical standpoint, MSTR has a high probability of a 20% price correction in Q2.

Related: MicroStrategy’s Saylor fuses work email address with Bitcoin Lightning

The stock’s yearly rally has landed its price near a resistance range — between $320 and $340 — notorious for capping breakout attempts. Suppose a pullback occurs, the price could drop toward its 50-3D exponential moving average (50-3D EMA; the red wave) below $260 by June.

MSTR 3-day price chart. Source: TradingView

MicroStrategy is expected to release its Q1 earnings report by May 2.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Fidelity downsizes value of its Twitter holdings

Fidelity has downsized the value of its investment in Twitter by more than half its initial stake in Elon Musk’s takeover of the social media platform.

Investment firm Fidelity has written down the value of its initial stake in Twitter following its funding of Elon Musk’s takeover of the social media platform.

According to a filing from the Fidelity Blue Chip Growth Fund in November 2022, the firm has written down the carrying value of its Twitter investment by more than 50%. The filing was first reported by Axios.

A write-down is a reduction in the value of an asset on a company’s balance sheet. This typically occurs when the asset’s market value falls below its book value, which is the value at which the asset is recorded on the balance sheet.

Fidelity’s initial stake in Twitter was valued at $19.66 million in October 2022 and has now been written down to just $8.63 million. According to Market Insider, Fidelity put forward $316 million to help Musk’s bid to take over Twitter in October 2022.

Related: Twitter adds BTC and ETH price indexes to search function

Fidelity holds its Twitter investments through its mutual funds in X Holdings I Inc., a holding company that Musk used as part of his Twitter takeover bid.

Musk’s takeover has been a controversial topic, marred by layoffs of staff and a plethora of operational changes at the social media giant. Various reports speculate that other investment firms may follow suit in writing down the value of their Twitter holdings.

Cryptocurrency exchange Binance was among a number of companies to put funds toward Musk’s Twitter acquisition. The company committed $500 million to co-invest in Twitter alongside the likes of Fidelity, Sequoia Capital Fund and 18 other companies.

Cointelegraph has reached out to Fidelity to ascertain the details of its Twitter holdings write-down.

Fidelity plans NFT marketplace and financial services in the metaverse

Newly filed trademark applications outline a long list of possible avenues for the firm in the metaverse.

Investment giant Fidelity Investments has filed trademark applications in the United States for a host of Web3 products and services, including a nonfungible token (NFT) marketplace and financial investment and crypto trading services in the metaverse.

This is according to three trademark filings submitted to the United States Patent Trademark Office (USPTO) on Dec. 21, which was highlighted by licensed trademark attorney Mike Kondoudis in a Dec. 27 tweet.

One of the key areas of the firm’s focus appears to be the metaverse, with Fidelity indicating that it could offer a wide range of investment services within virtual worlds including mutual funds, retirement funds, investment management and financial planning.

It also appears that metaverse-based payment services could be in the works, including electronic bill payments, fund transfers and the “financial administration of credit card accounts in the metaverse and other virtual worlds.”

In terms of crypto, the filings indicate that the firm could launch trading and management services in the metaverse, along with providing virtual currency wallet services.

“Electronic wallet services in the nature of electronic storage and processing of virtual currency for electronic payments and transactions via a global computer network; digital currency, virtual currency, cryptocurrency digital token,” the filing reads.

Fidelity Investments Trademark filing: USPTO

Additionally, Fidelity outlines that it could offer educational services in the metaverse in the form of “conducting classes, workshops, seminars and conferences in the field of investments and in the field of marketing financial services.”

“Providing business information to financial service providers by means of an internet web site, in the field of business marketing in the metaverse and other virtual worlds; referral services in the field of investment advice and financial planning in the metaverse and other virtual worlds” one filing reads.

NFTs are also in Fidelity’s plans, with the investment manager stating that it could launch an “online marketplace for buyers and sellers of digital media, namely, non-fungible tokens,” however further details on such are sparse.

Related: Current infrastructure can’t support the metaverse, says Huawei report

The latest filings from Fidelity show that the firm has not been spooked by the intense bear market in 2022 and recent FTX implosion, and is instead looking to increase its exposure and offerings in Web3.

The firm essentially outlined as such and called for stronger regulation when responding to a Nov. 21 letter from crypto-hating senators Elizabeth Warren, Tina Smith and Richard Durbin, which had called on Fidelity to reconsider its Bitcoin (BTC) retirement products due to the “volatile, tumultuous and chaotic” nature of crypto assets.

A Fidelity spokesperson told Cointelegraph at the time that the company “has always prioritized operational excellence and customer protection” and noted that “recent events” in the crypto industry have only “underscored the importance of standards and safeguards.”

It is also worth noting that back in October, Fidelity was reportedly looking to beef up its crypto unit by hiring 100 new staff members, a stark contrast to a number of crypto firms that have laid off a significant amount of employees this year.

Institutional investors are buying through crypto winter: Survey

Institutional investors continue to see the long-term potential of crypto and have been loading their bags throughout the year, according to a survey.

A survey of institutional investors suggests that their cryptocurrency allocations have increased over the last year despite the industry going through a prolonged crypto winter.

A Coinbase-sponsored survey released on Nov. 22 and conducted between Sep. 21 and Oct. 27, found that 62% of institutional investors invested in crypto had increased their allocations over the past 12 months.

In comparison, only 12% had decreased their crypto exposure, indicating most institutional investors may be bullish on digital assets in the long term despite prices falling, according to the survey. 

More than half of the investors surveyed said they were currently, or planning, to use a buy-and-hold approach for cryptocurrencies, with the belief that crypto prices will stay flat and range bound over the next 12 months. 

Additionally, 58% of respondents said they expected to increase their portfolio’s allocation to crypto over the next three years, with nearly half “strongly agreeing” that crypto valuations will increase over the long term. 

As has been widely reported before, regulatory uncertainty was once again the factor most investors were concerned about when weighing up whether to invest in crypto, particularly among those planning to invest in the next 12 months, where 64% noted concerns.

The representative sample of the Coinbase survey consisted of 140 institutional investors based in the United States who collectively have assets under management totaling around $2.6 trillion. The survey was conducted by business-to-business publisher Institutional Investor’s Custom Research Lab.

Related: $138B investment manager Man Group to launch crypto hedge fund: Report

In October, a survey of institutional investors by Fidelity Investments subsidiary, Fidelity Digital Assets, released on Oct. 27, had similar findings. In an interview with Cointelegraph, Fidelity head of research Chris Kuiper noted:

“They’re agnostic to some of this crazy volatility and price because they’re looking at it from a very long-term perspective. They’re looking over the next years, five years, decade or more.”

It is worth noting that both these surveys were conducted prior to the collapse of FTX, which according to CoinShares, has led to a record surge in short-investment products, while total assets under management of crypto institutional investors are now at $22 billion, the lowest in two years.

CoinShares’ James Butterfill on Nov. 21 said the increase in short investments is likely “a direct result of the ongoing fallout from the FTX collapse.”