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News/BlackRock Breaks New Ground with Ethereum Trust Filing

BlackRock Breaks New Ground with Ethereum Trust Filing

Van Thanh Le

Nov 10 2023

6 months ago3 minutes read
Chibi cubic robot in green and red, engaging with Ethereum-like digital elements against a bright contrasting background

Building Trust in Cryptocurrency: BlackRock’s March Forward

Sweeping changes in the cryptocurrency sphere are afoot. Today, our story begins with BlackRock, the world’s heavyweight champions of asset management. Their recently strategic maneuver, filing for an iShares Ethereum Trust in Delaware, may have set the stage for a seismic shift in the landscape of institutional cryptocurrency investment. 

blackrock ishare ethereum trust filing.jpg
Source: State of Delaware

Banking on the burgeoning promise of digital assets, the filing was officially submitted by BlackRock Advisors LLC on November 9, 2023, according to the Delaware Department of State Division of Corporations. The document's public accessibility lends an additional degree of transparency to BlackRock's endeavors. 

Placed under the spotlight, a pattern of consistent commitment towards incorporating cryptocurrencies into their financial product offerings becomes apparent. Despite regulatory hurdles, the asset management giant had previously lodged a filing for an iShares Bitcoin Trust in June, paving its way into the digital economy. The designated custodian for these bold ventures is none other than Coinbase Custody Trust Company. 

On similar lines, BlackRock shook the market with a proposition for a spot bitcoin ETF, listed under the ticker IBTC, currently under active review by the SEC. Meanwhile, insider reports suggest potential partnerships with trading firms, such as Jane Street and Virtu Financial, brewing in the backdrop to infuse liquidity for the ETF upon securing approval. 

Institutional Interest: Crypto’s Flourishing Future

BlackRock CEO, Larry Fink has vocally acknowledged the wave of institutional interest in cryptocurrencies as a burgeoning realm not to be dismissed. This interest can be corroborated by market responses to even the slightest hint of progressive movement in the space, such as a bitcoin rally triggered by rumors circling a potential ETF approval. 

Here’s where things get exciting: data gleaned from IntoTheBlock showcases a bullish sentiment amongst Ethereum investors. A whopping 263,520 ETH, approximately worth $505 million, has reportedly been pocketed away into long-term storage, signifying believer’s confidence in Ethereum's trajectory.

Ethereum (ETH) Exchange Netflows.png
ETH Exchange Netflows. Source: IntoTheBlock

Ethereum’s Market Momentum Fuelled by BlackRock’s Trust Filing

The market’s reaction to BlackRock’s Ethereum Trust filing? A bullish frenzy. Ether's price chart bore testament to this rave, escalating an impressive 8% to crest at just over the $2,040 mark, setting a new precedent not witnessed since a four-month hiatus since July. The Ethereum market cap has thus experienced a sharp uptick. 

chart (1).webp

Despite this meteoric rise, a temporary setback pulled the price back to the $2,010 level, implicit in the market’s volatility. Interestingly, Ethereum has flaunted a promising 60% upward climb since the commencement of the year, solidifying investor confidence in its potential. 

With a 6% price increase at the time of writing, ETH has already outperformed BTC in the past 24 hours, as the market leader is going down to $36,400 after a significant surge to nearly $38,000 due to the Bitcoin ETF anticipation.

BlackRock's Ethereum Move Sees Coinbase and Staking Tokens Soar

The buzz around the iShares Ethereum Trust, established by BlackRock Advisors, has injected a wave of optimism in the crypto market, particularly hinting at the possible introduction of a spot ether ETF. This anticipation has fueled a price surge across the board: ether's liquid staking platforms and Coinbase shares have notably benefited. 

liquid staking token price.png

Coinbase, a heavyweight in the crypto exchange arena and a significant player in ETH staking, saw its shares swell by 8%. Meanwhile, governance tokens for Lido Finance and RocketPool weren't left behind, with LDO leaping 8.6% and RPL ramping up 13.3% within a day. 

This collective uptrend underscores the market's responsive enthusiasm for the potential expansion of Ethereum-based financial products.

Ethereum Whale's $49.52M Move to Binance

Amid the surge, a crypto whale moved 25,700 ETH to Binance, valued at about $49.52 million. This transaction mirrors an earlier move of an equal amount of ETH from Binance, which at the time was worth $47.71 million, suggesting a potential profit of $1.81 million for the whale. 

BlackRock's Ethereum ETF: A Glimpse of Future Adoption

BlackRock capitalized on the burgeoning crypto trend by confirming plans for an Ethereum ETF. A NASDAQ filing conveyed this titanic move in the financial world, evincing a growing comfort with and institutional acceptance of Ethereum.

The market's litmus test overwhelmingly endorsed BlackRock's move. Following the filing, Ethereum's price witnessed a swift jolt, soaring past the $2,000 mark. This meteoric rise heralded a high unseen by the crypto world since the dawn of April.

chart (1).webp

Market Analysts Weigh in: The SEC's Ethereum ETF Decision 

In analyzing the turn of events, Bloomberg's Eric Balchunas foresees no reason for the SEC to reject the Ethereum ETF proposal. Balchunas's statement echoed the burgeoning confidence within the crypto market. Market players are beginning to place their bets on the impending seal of approval for institutional Ethereum adoption. 

Ethereum's Retail Demand: A Flight of Fancy or Here to Stay?

Amid the wave of optimism, Ethereum charted a steady course to a six-month price peak. This impressive rebound has posed queries regarding the sustainability and degree of retail demand for Ethereum.

As the recreational investor segment scorches a trail into the Ethereum landscape, the number of Ethereum's micro wallets has shot past the 100,000 mark, indicating a notable uptrend toward adoption and diversification.

Ethereum's Distribution of Wealth

An interesting point to note includes the sizable portion of Ethereum being held by whales, amounting to 32.94%. Contrarily, smaller investors still stake a claim, holding approximately 12.48% of Ethereum. The relative surge in lower-tier wallet categories suggests an ascendant tide of small-scale investors vying for a place in the crypto universe. 

Ethereum's Fee Conundrum 

The ETF filing transpired as a game-changer for Ethereum's network. With the median gas prices abruptly spiking to an astounding 270 gwei, Ethereum transaction fees briefly jetted to $100. This surge in fees reflects an insatiable demand for block space, inevitably impacting transaction expenditure. 

brave_screenshot_dune.com.png
Source: @hildobby/ Dune

Ethereum's Interesting Offset: Supply and Demand 

Interestingly, amidst the frenetic pace of turnout, Ethereum faced a supply contraction exceeding 5,670 ETH, estimated to be worth around a staggering $11.8 million. This marked a deflationary period distinctively driven by high network traffic and the resulting gas fees. It led to a surplus of Ethereum being 'burned,' contributing to a decrease in available supply.

Altcoins and NFT trading volumes emerged as catalyzing agents, driving the Ethereum network toward augmented activity. 

brave_screenshot_ultrasound.money.png
Source: ultrasound.money

Institutional Interest: Ethereum in the Spotlight

BlackRock's audacious Ethereum Trust registration in Delaware and a spot Ethereum ETF with Nasdaq triggered a notable swell in Ether's price. A 10% escalation followed the filing, prompting an inversion or what may be starkly termed as a "nuclear winter" for Ethereum’s skeptics.

Traders on a busy floor watching Ethereum's rise on screens, with Nasdaq and BlackRock in the background.webp

Market experts have given their take on this monetary ebb and flow. Investment firm Matrixport's Head of Crypto Research and Strategy, Markus Thielen, interpreted the surge as a "massive short squeeze." He didn't hold back from highlighting how such market-neutral crypto hedge funds saw a spurt in profits off these fluctuating funding rates. 

Trading conglomerate QCP Capital further cemented Ether's prosperous narrative. The firm aligned Ether's superior performance to BlackRock's decisive filing. This recent surge by Ethereum has analysts expecting a repeat of the market playbook observed when BlackRock placed a spot Bitcoin ETF on the table.

Key Insights: The Takeaway

The BlackRock's maneuver to register an iShares Ethereum Trust in Delaware unabashedly voices their deepening interest in pioneering institutional uptake of cryptocurrencies. This strategic undertaking has not just managed to catalyze Ether's price but has sent a ripple of anticipation coursing through the market. 

The substantial transition of ETH into long-term storage coupled with substantial capital inflow into Ethereum futures foregrounds a bullish sentiment that implies potential for a significant appreciation of Ethereum's value. One thing is for sure, BlackRock’s next steps are not to be missed, and a spot Ether ETF just may be on the horizon to revolutionize the future of institutional crypto investment.

FAQs

1. What does BlackRock’s filing for an iShares Ethereum Trust entail?

BlackRock has filed for an Ethereum-based product named iShares Ethereum Trust. It signals their increasing interest and planned forays in the cryptocurrency world.

2. When did BlackRock Advisors LLC file the iShares Ethereum Trust?

The filing was submitted to the Delaware Department of State Division of Corporations on November 9, 2023.

3. Has BlackRock exhibited previous interest in cryptocurrencies?

Yes, BlackRock has demonstrated significant interest in cryptocurrencies, including a June filing for an iShares Bitcoin Trust and a current SEC-reviewed application for a spot bitcoin ETF.

4. How have investors responded to BlackRock's Ethereum filing?

The market responded notably, with Ether's price rallying nearly 8% to crest at $2,040, reflecting a bullish sentiment among investors. 

5. What could BlackRock's Ethereum Trust filing mean for the future of institutional crypto investment?

The filing hints at the incorporation of more crypto-related offerings and could pave the way for groundbreaking advancements like a spot Ether ETF.

This article has been refined and enhanced by ChatGPT.

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