Bitcoin

BTG Pactual, known for its commitment to cryptocurrency services for customers, has entered into an agreement to purchase 100% of Orama’s shares, valued at 500 million Brazilian reais. This acquisition, subject to regulatory approvals, including from Brazil’s central bank, underscores BTG Pactual’s commitment to expanding its digital platforms and providing more diverse investment opportunities.

Marcelo Flora, BTG Pactual’s digital platforms partner, expressed excitement about the acquisition, highlighting the prospect of granting Orama customers access to the comprehensive BTG platform.

Orama’s Profile

Founded in 2011, Orama boasts nearly 18 billion Brazilian reais in assets under custody and serves approximately 360,000 customers. While Orama primarily focuses on distributing investment funds and fixed-income products, it has also ventured into cryptocurrency investments.

Block3 Ativos Digitais FIM IE one-year price chart. Source: Bloomberg

In April 2022, Orama’s wealth management arm, Orama Singular, introduced the Block3 fund—an actively managed fund centered on digital assets. Block3 offers investors a diverse portfolio within the cryptocurrency industry, encompassing Bitcoin, tokens, derivatives, and more.

Notably, Orama’s digital asset fund has exhibited remarkable growth over the past year. It surged by over 30%, rising from 90.5 reais in October 2022 to 118.8 reais in September 2023, as reported by Bloomberg.

The Crypto Horizon for BTG Pactual

While the implications of BTG Pactual’s acquisition of Orama in terms of new crypto-related products remain uncertain, the bank has been actively involved in the crypto space in recent years. In April 2023, BTG Pactual revealed its intentions to launch BTG Dol—a stablecoin pegged to the US dollar at a 1:1 ratio, utilizing the bank’s custody services.

Additionally, BTG Pactual previously introduced a crypto trading app that enables its customers to directly invest in cryptocurrencies, solidifying its presence in the growing digital asset landscape.

BTG Pactual’s foray into the world of cryptocurrency reflects the evolving financial landscape, where traditional institutions are increasingly recognizing the value and potential of digital assets in their investment portfolios and service offerings.

The possibility of Bitcoin ETFs gaining approval in the United States has generated significant interest. Here’s an analysis of the potential impact, hurdles, and implications of this development.

Unlocking $600 Billion in New Demand

The recent directive by a U.S. appellate court to the SEC to reassess Grayscale’s Bitcoin ETF application could unleash a substantial influx of $600 billion into the cryptocurrency market. The approval of a Bitcoin ETF has the potential to democratize cryptocurrency investments, similar to what ETFs did for Brazilian markets.

Market analysts anticipate the approval of a Bitcoin ETF by early 2024, doubling Bitcoin’s current market cap of approximately $550 billion. However, these estimates remain speculative and contingent on various factors, including regulatory responses and market dynamics.

The SEC’s delays and rejections of Bitcoin ETF applications, led by Chair Gary Gensler, have faced criticism and investor frustration. A bipartisan group of lawmakers has urged the SEC to grant immediate approval for a spot crypto ETF, adding to the complexity of the approval process.

Lobbying for New Regulations

Major players in the crypto industry, such as Coinbase, are actively lobbying for new regulations, reflecting the ongoing contestation over the future of crypto regulations.

Recent SEC actions and delays on ETF applications have cast uncertainty over the approval timeline. Speculation suggests that filings from various firms, including BlackRock, Bitwise, and Wisdomtree, could also experience delays, impacting the overall approval process.

Competition in the Bitcoin ETF market may drive down management fees, impacting revenue for financial institutions like BlackRock. These fees, usually ranging from 0.20% to 2.00%, have been decreasing due to competition, cost-effective strategies, and investor demand for transparency.

Grayscale’s Revenue Model

Grayscale generates revenue from its ETFs through management fees, typically calculated as a percentage of the total assets under management (AUM). For instance, the Grayscale Bitcoin Trust (GBTC) charges a 2% annual fee, which has generated substantial revenue.

Bitcoin ETF approval could have geopolitical implications, setting a precedent for other countries and accelerating global cryptocurrency adoption. The court ruling challenges the SEC’s sole authority over digital assets, indicating potential shifts in crypto regulations.

While hurdles remain on the path to Bitcoin ETF approval, this development signifies progress and holds the promise of greater accessibility and regulation in the crypto market, potentially attracting more capital and wider acceptance.

Costco’s rapid sale of gold bars has drawn attention, reflecting a growing investor interest in traditional safe-haven assets like gold. But is gold a better investment than Bitcoin in today’s economic landscape?

Gold has experienced a remarkable 12% price surge in the past year, partly driven by the Federal Reserve’s efforts to combat inflation through higher interest rates. The key question is whether this surge will push gold’s price above the $2,050 mark, last seen in May.

Gold (yellow) vs. Bitcoin (orange), S&P 500 (green) and WTI oil (black), last 12 months. Source: TradingView

While gold’s performance is notable, it’s crucial to contextualize it. Over the same period, gold’s returns have roughly matched those of the S&P 500 (15.4% gain) and WTI oil (12% increase). In contrast, Bitcoin has seen an impressive 39.5% rise, highlighting its significant potential.

Risk-Reward Scenario Favoring Gold

Gold’s reliability as a store of value during crises and uncertainty is one of its strongest attributes. With a market value of over $12 trillion, gold is a prime candidate for capital inflows when investors exit traditional markets, such as stocks and real estate.

Gold (yellow) vs. Bitcoin (orange), S&P 500 (green) and WTI oil (black), Feb/Mar 2020. Source: TradingView

Central banks, including China, Poland, Turkey, and Russia, have been net buyers of gold, with Russia planning to bolster its reserves by $433 million. This interest reflects the desire to shield economies from commodity market volatility, particularly in the oil and gas sectors.

Gold Production and Stock-to-Flow Ratio

In 2022, approximately 3,100 tonnes of gold were produced, with Russia and China contributing significantly. The World Gold Council predicts record-high production of 3,300 tonnes in 2023 if prices continue to rise. Gold’s stock-to-flow ratio, a crucial metric, has remained stable at around 67 for 12 years, indicating its relative scarcity.

200 years of gold production. Source: Visual Capitalist

Bitcoin’s performance could surpass gold’s, particularly during events like a U.S. government shutdown due to the debt limit. Bitcoin’s $500 billion market capitalization allows for significant price jumps, even with lower inflows. Additionally, central banks selling gold holdings to cover expenses could boost Bitcoin’s appeal.

While gold remains a stalwart safe-haven asset, Bitcoin’s remarkable gains and lower equivalent inflation rate position it as a strong contender for investors seeking alternative stores of value. Economic uncertainty and Federal Reserve policies continue to support both assets, making the choice between them a matter of individual investment strategy.

Bitcoin lending platform Ledn is expanding its services by launching Ethereum (ETH) and Tether (USDT) interest accounts, driven by user demand for an alternative to manually staking ETH.

ETH Yield Offering

Ledn, based in the Cayman Islands, has introduced an ETH offering to its existing Growth Accounts products, providing users with ring-fenced opportunities to earn interest on their Bitcoin and USD Coin deposits. Users sought a more straightforward way to earn interest on ETH holdings without managing Ether through liquid staking pools.

Ledn emphasizes that its Growth Accounts are distinct from its other products and services. Deposited ETH is exposed solely to the counterparty responsible for generating yield from the staked amount. Therefore, user deposits remain secure even in the event of Ledn’s bankruptcy, addressing concerns that have arisen due to failures in the crypto lending sector.

Mauricio Di Bartolomeo, Chief Strategy Officer at Ledn, highlighted the convenience of the ETH yield option compared to native ETH staking. Ledn plans to extend ETH support across its entire suite of products in the coming months.

Additional Stablecoin Growth Account

Ledn has also announced the launch of a second stablecoin Growth Account, allowing users to deposit and earn interest on Tether (USDT) tokens starting from October 12. However, these offerings will not be available to users in the United States or Canada.

Ledn follows the trend of Bitcoin-focused companies expanding their support for cryptocurrencies beyond BTC. For example, Casa, a noncustodial wallet platform initially focused on Bitcoin, introduced multisignature ETH self-storage in June 2023.

In August 2023, Ledn entered into a partnership with Cayman Islands real estate company Parallel, enabling cryptocurrency users to invest in property as a pathway to eventual residency.

Ledn’s response to user requests for Ethereum and stablecoin interest accounts reflects its commitment to providing a broader range of crypto financial services.