Weekly Newsletter[Block#830,054]
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A. Bitcoin Spot ETF
1. Bitcoin ETFs hold more bitcoin than MicroStrategy
2. Valkyrie becomes first spot bitcoin ETF to diversify coin custody, uses Coinbase and BitGo
B. Bitcoin Ecosystem
1. Microstrategy buys 850 more bitcoin for $37 million
2. LN markets upgrades bitcoin trading with DLCs
C. Regulation
1. El Salvador’s bitcoin-friendly president Nayib Bukele wins re-election
2. South Korea regulator discusses spot Bitcoin ETF with SEC chief Gary Gensler
D. Macroeconomy
1. Federal Reserve retains tight policy
2. Eurozone inflation eases more than expected
E. Bitcoin Tech Development
1. Citrea launches first ZK Rollup on bitcoin, enhancing blockspace capabilities
2. Proposal for replace by feerate to escape pinning
3. Notable code and documentation changes
A. Bitcoin Spot ETF
1. Bitcoin spot ETFs hold more bitcoin than MicroStrategy
The recently launched spot bitcoin ETFs, excluding Grayscale’s GBTC, added nearly another 5,000 bitcoin to their holdings Wednesday, and now at more than 192,000 bitcoin, own more of the bitcoin than MicroStrategy (MSTR), whose total stood at 190,000 as of the end of January. The funds have only been on the market for less than one month but have already attracted billions of dollars from investors looking to gain exposure to bitcoin without having to buy and store it directly. On Wednesday alone, there were over $1 billion in inflows into the ETFs, according to data from Bloomberg Intelligence.
2. Valkyrie becomes first spot bitcoin ETF to diversify coin custody, uses Coinbase and BitGo
Digital asset investment firm, Valkyrie, has become the first spot Bitcoin Exchange-Traded Fund (ETF) to diversify the custody of its coins, according to a recent Securities and Exchange Commission (SEC) filing. In a move to enhance security and reliability, Valkyrie is now working with leading custodian provider BitGo, already in addition to Coinbase, to safeguard their funds. The filing, dated February 1, 2024, is an attempt by Valkyrie to strengthen the security infrastructure of its spot Bitcoin ETF by engaging multiple custody providers. The collaboration with BitGo aims to optimize for the safety of their bitcoin by diversifying the funds that were all previously held with Coinbase.
B. Bitcoin Ecosystem
1. Microstrategy buys 850 more bitcoin for $37 million
MicroStrategy, a leading business intelligence and software company, has continued its steadfast commitment to Bitcoin by purchasing an additional 850 bitcoin at a total cost of $37.2 million, Founder & Chairman Michael Saylor announced on Feb 6th. “We acquired 31,755 additional bitcoins since the end of the third quarter, marking the largest quarterly bitcoin holding increase in the last 3 years and the 13th consecutive quarter of adding more bitcoin on our balance sheet,” stated Andrew Kang, MicroStrategy Chief Financial Officer. “We benefited from the significant increase in bitcoin prices in Q4 and we also continued to leverage our strategic capital markets activities and cash on hand to accumulate more bitcoin and accrete incremental value for our shareholders.”
Reference:
https://bitcoinmagazine.com/business/microstrategy-buys-850-more-bitcoin-for-37-million
2. LN markets upgrades bitcoin trading with DLCs
Traditionally, trading for institutions has always been centralized and standardized. At some point, a clearinghouse (CCP) takes control of the funds and manages settlement. Paradoxically, despite technological advancements, Bitcoin trading is much riskier than traditional trading: no regulation, trading and custody in the same place, conflicts of interest, numerous risks, and frequent bankruptcies. DLC Markets aims to address these issues. Drawing inspiration from traditional OTC trading, The team has developing a marketplace where participants can meet and transact. Similar to an ISDA/CSA agreement, collateral is exchanged directly between peers. To manage settlement, a smart contract (DLC) acts as a CCP. This smart contract is unique to each transaction, ensuring segregated fund management, complete transparency for transaction participants, and confidentiality from external actors.
Reference:
https://bitcoinmagazine.com/technical/ln-markets-upgrades-bitcoin-trading-with-dlcs
C. Regulation
1. El Salvador’s bitcoin-friendly president Nayib Bukele wins re-election
El Salvador’s bitcoin-friendly president Nayib Bukele is on his way to another five-year term, according to exit polls which show him with an overwhelming lead shortly after voting ended on Sunday evening. The result was widely expected as Bukele, who served since 2019 as president, enjoyed great popularity in the country and led in pre-election polling by a large margin. “According to our numbers, we have won the presidential election with more than 85% of the votes and a minimum of 58 of 60 deputies in the Assembly,” tweeted Bukele.
2. South Korea regulator discusses spot Bitcoin ETF with SEC chief Gary Gensler
South Korea’s Financial Supervisory Service (FSS) — the chief financial regulator in the country is planning to tap the United States Securities and Exchange Commission (SEC) for insights into spot Bitcoin exchange-traded funds (ETFs). The FSS examines and supervises financial institutions under the broad oversight of the Financial Services Commission. FSS chief Lee Bok-Hyun presented a business plan for 2024 at the Financial Supervisory Service in Seoul on Feb. 5. The plan includes visits to major advanced financial markets, such as New York, in the second quarter of the year to discuss various aspects of South Korean financial markets, including discussions on spot Bitcoin ETFs.
Reference:
https://cointelegraph.com/news/s-korea-regulator-spot-bitcoin-etf-sec-chief-gary-gensler
D. Macroeconomy
1. Federal Reserve retains tight policy
Federal Reserve Chair Powell said that the US economy has not yet achieved a soft landing, especially given that core inflation remains significantly higher than the Fed’s target. He said that “we have a long way to go.” He said that, although the job market is moving toward normality, it remains unbalanced with a relatively high job openings rate and continued sharp wage increases. Plus, he said this before the stunning employment report for January was released. He said that things are moving in the right direction, driven by rising participation and immigration. Still, he worries that inflation will get stuck at a level above the Fed’s target, especially given the evident strength of the economy. Thus, the Fed will need to wait more time before deciding to cut interest rates, hoping to see an easing of wage inflation.
Reference:
https://www2.deloitte.com/us/en/insights/economy/global-economic-outlook/weekly-update.html
https://www.statista.com/
2. Eurozone inflation eases more than expected
The latest data on inflation in the 20-member Eurozone was very favorable. Yet bond yields rose very recently on investor expectations that the inflation data will increase the likelihood that the European Central Bank (ECB) will wait longer to cut rates. The reason is that, although headline and core inflation both decelerated, inflation in labor-intensive services did not. Consequently, investors worry that the last mile of inflation reduction will be stifled by a tight labor market. Or, more accurately, they worry that the ECB is worried about that last mile. In January, consumer prices were up 2.8% from a year earlier and down 0.4% from the previous month. When volatile food and energy prices are excluded, core prices were up 3.3%, the lowest since March 2022. Core prices were down 0.9% from the previous month.
Reference:
https://www.bloomberg.com/news/articles/2023-06-01/eurozone-inflation-latest-price-gains-slow-but-ecb-will-keep-hiking-rates
https://www2.deloitte.com/us/en/insights/economy/global-economic-outlook/weekly-update.html
E. Bitcoin Tech Development
1. Citrea launches first ZK Rollup on bitcoin, enhancing blockspace capabilities
Citrea, the inaugural ZK Rollup designed to elevate bitcoin’s blockspace capabilities through zero-knowledge technology. Departing from traditional scalability solutions that move security and demand off-chain, Citrea introduces an approach to scale bitcoin comprehensively with zero-knowledge proofs, ensuring on-chain verifiability and data availability within the bitcoin network. This positions Citrea as one of the first scaling solutions to enable more complex applications without compromising Bitcoin’s security or altering its consensus rules. Citrea’s zero-knowledge rollup creates an execution shard, batching multiple transactions with minimal data essential for on-chain verification. This method allows Citrea to maximize the efficient utilization of underlying blockspace while maintaining the full security of Bitcoin’s Layer 1.
2. Proposal for replace by feerate to escape pinning
Peter Todd posted to the Bitcoin-Dev mailing list a proposal for a set of transaction replacement policies that can be used even when existing replace-by-fee (RBF) policies won’t allow a transaction to be replaced. His proposal comes in two different variations: 1.Pure replace by feerate (pure RBFr): a transaction currently in a mempool can be replaced by a conflicting transaction that pays a significantly higher feerate (e.g., the replacement pays a feerate 2x the replacee’s feerate). 2. One-shot replace by feerate (one-shot RBFr): a transaction currently in a mempool can be replaced by a conflicting transaction that pays a slightly higher feerate (e.g. 1.25x), provided the replacement’s feerate is also high enough to put it in the top ~1,000,000 vbytes of the mempool (meaning the replacement would be mined if a block were produced immediately after it was accepted).
Reference:
https://bitcoinops.org/en/newsletters/2024/02/07/?ref=nobsbitcoin.com
3. Notable code and documentation changes
Core Lightning #6936 adds infrastructure to assist with deprecating CLN features. Features are now deprecated in code using functions that automatically disable those features by default based on the current program version. Users can still force-enable the features even after their indicated deprecation version as long as the code still exists. This avoids an occasional problem where a CLN feature would be reported as deprecated but continued functioning by default for a long time after it was planned for removal, possibly leading users to continue depending on it and making actual removal more difficult.
Bitcoin Core #29189 deprecates libconsensus. Libconsensus was an attempt to make Bitcoin Core’s consensus logic usable in other software. However, the library hasn’t seen any significant adoption and it has become a burden on maintenance of Bitcoin Core. The plan is to “not migrate it to CMake and let it end with v27. Any remaining use-cases could be handled in the future by libbitcoinkernel.”
Reference:
https://bitcoinops.org/en/newsletters/2024/02/07/?ref=nobsbitcoin.com
