Bitcoin Tops $72k as Trump Touts ‘Crazy New Currencies’

GM! This week: Coinbase talks Ethereum with the SEC, BlackRock’s Bitcoin holdings surpass MicroStrategy's, Pantera Capital eyes the FTX estate’s Solana, and Ethereum is poised for a major “Dencun” upgrade.

Coinbase’s Meeting

America’s leading crypto exchange met with the Securities and Exchange Commission last week to discuss the Grayscale Ethereum Trust, an $11 billion fund that Grayscale wants to convert into a spot Ethereum ETF — if the SEC is willing to play ball.

During its meeting, Coinbase made a point to say that Ethereum’s spot mark is “resilient to fraud and manipulation.” In swatting down several applications for spot Bitcoin ETFs, the agency’s concerns with fraud and manipulation were a common cause — until the products were eventually approved, following Grayscale’s courtroom victory over the SEC last summer.

In meetings with spot Ethereum ETF hopefuls, the SEC’s staff are “not really engaging in meaningful ways,” Eleanor Terrett of Fox Business reported on Sunday, citing people familiar with the matter. She added that SEC Chair Gensler has “already placated the industry,” in his mind, with the approval of several spot Bitcoin ETFs in January.

“There's no court loss hovering over” the SEC this time, Bloomberg ETF Analyst Eric Balchunas pointed out on X, adding that the SEC’s “staff has not given any comments yet to the issuers, which is not a good sign” in terms of approvals happening soon.

Market watchers are hooked on May 23rd as a decision deadline for VanEck’s Ethereum ETF application looms, but Balchunas lowered his odds for approval by then to 35% on Monday. 

MicroStrategy’s Lead

The flippening is upon us — at least when it comes to MicroStrategy and BlackRock.

As of Friday, BlackRock’s Bitcoin ETF contained nearly 198,000 Bitcoin, appearing to overtake the 193,000 Bitcoin that MicroStrategy has stacked up under Michael Saylor’s leadership. However, it appears that BlackRock didn’t have the title for long, with MicroStrategy saying it had acquired 12,000 more Bitcoin on Monday, upping its coffers to 205,000 Bitcoin. 

As BlackRock’s Bitcoin ETF continues to attract billions of dollars, the back-and-forth represents an industry in the midst of institutionalization. MicroStrategy’s Bitcoin bet was characterized as a risky one for years, only for BlackRock to secure a similarly sized stash in a matter of months. 

FTX’s Solana

Pantera Capital is eyeing Solana which currently belongs to the estate of collapsed crypto exchange FTX, per Bloomberg. Citing market materials from the hedge fund, the news outlet reported that Pantera could establish a Solana fund that purchases $250 million of the coin.

Investors with at least $25 million would be able to join the fund and buy Solana at a 39% discount relative to its 30-day average price — well below its current price of nearly $150. As of now, FTX’s estate holds 10% of Solana’s total supply, equal to 41 million Solana.

During his criminal fraud trial, FTX founder and former CEO Sam Bankman-Fried testified that he had bought Solana for as low as $0.20. FTX’s estate holds Solana which belonged to the exchange's customers too, which was valued at around $14.50 per coin when FTX buckled.

The Fed’s Stance

Federal Reserve Chair Jerome Powell said last week that the U.S. central bank is “nowhere near” recommending a central bank digital currency (CBDC), let alone adopting a blockchain-based equivalent to the greenback in any form.

“People don’t need to worry about it,” he said, adding that “the last thing we would want with the Federal Reserve would be to have individual accounts for all Americans.”

Powell’s comments come as conservatives continue to oppose the technology publicly, including former President Donald Trump, who called CBDCs “very dangerous” last month. Not to mention anti-CBDC comments that come from candidate Robert F. Kennedy Jr. and Florida Governor Ron DeSantis, who has since dropped out of the presidential race.

All three voices have raised concerns that a CBDC could be used to surveil Americans’ financial transactions, but Powell threw cold water on the prospect, claiming, “That's just something we would not stand for or do or propose here in the United States.”

Trump’s Change

Trump went on CNBC Monday to talk about Bitcoin, and it appears the former commander-in-chief has come around to crypto’s largest coin. “There has been a lot of use of [Bitcoin], and I’m not sure that I would want to take it away at this point,” he said in an interview.

 “I make money with it, I have fun with it too,” Trump said of crypto as well. “Crazy new currencies, that’s what I call them. They’re crazy new currencies, whether it’s Bitcoin or others. People are using [them].”

 While Trump said he hasn’t bought any Bitcoin, he holds around $8.7 million worth of digital assets, composed of both donations from the crypto community and proceeds from the sale of Trump Digital Trading Cards, his collection of Polygon-based NFTs.

Trump’s comments represent a more favorable take on Bitcoin compared to a month ago when he said he could “live with it one way or the other,” and far more praise than he was willing to give the asset in 2021 when he said it “just seems like a scam.” 

Dencun’s Savings

Ethereum’s Dencun upgrade is scheduled to go live on Wednesday, and the expected result is a deluge of cost savings for users on layer 2 rollups with the introduction of EIP-4844, also known as “proto-danksharding.”

But just how much cheaper will transactions be as rollups shift to using so-called “blobs,” instead of posting bundled transactions with Ethereum calldata? According to the decentralized prediction market Polymarket, there’s a 36% chance that one blob will cost less than 0.0001 Ethereum or $4.01 after the upgrade’s activation. Currently, an equivalent amount of Ethereum calldata costs 0.06 Ethereum or $242, according to a post from Vitalik Buterin on X.

So, the introduction of proto-danksharding could reduce costs by a factor of 60 times for rollups. But just how much of an improvement takes place in the upgrade’s immediate aftermath is yet to be seen. Check back in next week — it currently costs $0.83 to send Ethereum on the layer-2 network Arbitrum.

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