Ethereum issuance turns negative for the first time in history, producing another date for the cryptoasset history
books. Twitter follows Substack, trialling Bitcoin tipping in a bid to overhaul its commercial prospects. And India has
a new plan to regulate, define and tax cryptocurrencies — much to the joy of certainty-seeking crypto businesses.
EIP 1559 sees ETH soar, issuance turns negative for first time
It is one thing — in crypto and in business more broadly — to make bold promises, and quite another to deliver.
Now crypto market watchers have a new date for the history books: Friday 3 September 2021. On this day, the 24-hour
issuance of ETH dipped below zero for the first time.
The number of new ETH issued dived from an average 10,000 per day to less than 5,000 in late August, the charts show. On
3 September, the net ETH issued was negative 333.85, according to date sourced from IntoTheBlock, via Etherchain,
Coinmetrics and Coinmarketcap.
This is the result of the introduction of deflationary tokenomics to the programmable money blockchain, established by
EIP-1559 in the London hard fork. Since that code upgrade went live on 5 August 2021 the market price of Ethereum has
soared by 40% from $2,827 to its current level, now just 5.1% short of its all time high of $4,168.70.
This fee burn mechanism was intended to act as a counterpoint to Ethereum inflation, destroying the base fees paid for
transactions to be included in the Ethereum ledger. So we see network effects writ large: the more Ethereum is used, the
more useful it becomes.
And despite a more than 10x return for ETH investors in the past 12 months; from $357.33 per coin to $3,980 today, there
appear to be few roadblocks to even greater price appreciation for the world’s second-largest cryptoasset.
Data from ltrasound.money shows that NFT market OpenSea is responsible for the largest proportion of ETH burn — around
15% of the total — but ETH transfers between wallets now burn a small portion of ether, too. Standard ETH transfers have
burned over 18,000 ETH to date.
Today a total of 222,432 ETH worth $866m have been burned — removed from circulation permanently — since the London hard
fork. This is spooling up at an exponential rate, and the burn rate now sits at around 4.71 ETH per minute.
It is difficult to understate the importance of the success of EIP-1559, or Ethereum Improvement Proposal.
The fee market alteration idea was first proposed by Ethereum de facto head Vitalik Buterin and a five-strong team of
developers back in April 2019. There followed over two years of intense trials on Ethereum’s various testnet blockchains
— effectively sandboxes for testing code changes in the wild — to ensure EIP-1559 would not have any unintended or
unforeseen consequences.
The relative smoothness with which this has been introduced has lit a fire under Ethereum at a time when it is facing
very strong challenges from smart contract platforms like Solana and Cardano.
On 6 September the aggregated open interest in Ethereum futures surged to a fresh all-time high, according to TheBlock
data.
Vitalik’s theories to date have been sound: giving the market much greater confidence in the future direction of
scheduled updates. The next major step in Ethereum’s switch away from proof of work to proof of stake is the planned
merger between the Beacon chain and the Ethereum main chain. No date has been finalised, but best guesses put this
happening in Q1 2022.
Currently around 5.4 million ETH are scheduled to be issued each year, giving ether an inflation rate or supply
growth
rate of around 2.4%. Tracking data aggregator Ultrasound.money statistics, we can see that in a post-merge simulator,
supply should fall to negative 1.8% annually once the Beacon chain and ETH 2 chain merge. Issuance at that point —
in
theory — falls from 5.4 million ETH per year to just 0.4 million ETH per year.
There’s an idiom much beloved by the startup chiefs of Silicon Valley: ‘building the plane while it is already flying’.
That’s effectively what Ethereum has done here. And so successfully that instead of crashing to the ground, it has left
the blockchain soaring into newly rareified air.
Twitter adds Bitcoin tipping: contrary to ‘digital gold’ tag
While gold is an important component in conductive electronics, no-one uses the precious metal as actual currency. So it
is with some interest that we watch the world’s largest companies switch up Bitcoin’s ‘digital gold’ tag by trialling it
as a means of exchange for tipjar service online. On 23 August the popular newsletter service Substack added the option
to tip creators and writers in bitcoin, with payments using the Layer 2 Lightning Network.
Substack has around 500,000 paying subscribers and while it is relatively simple to add tipping services to an
individual newsletter, with merchants like PayGo, these are third-party workarounds rather than internally-resourced and
compliant functions.
A matter of weeks later, Twitter (NYSE:TWTR) joined the fray.
Eagle-eyed market watchers spotted a code update to the social media service’s TipJar system that would add the ability
to pay fractions of a bitcoin to those users considered to have shared useful data or information.
Among the uses of TipJar are to be a competitor to fan-driven regular payment services like Patreon, and could provide
one solution to the interminable problem of how to effectively monetise exclusive, expensive journalism.
Twitter’s chief executive told investors in July that Bitcoin would be a “big part” of Twitter’s future, and that BTC
was best placed to become the currency of the internet.
If the internet has a native currency, a global currency, we are able to move so much faster with products such as
Super Follows, Commerce, Subscription, Tip Jar, and we can reach every single person on the planet because of that,
instead of going down a market-by-market approach.
Jack Dorsey, CEO, Twitter
The primary goal of the bill is to define cryptocurrency according to the technology used in it. It is expected to shed
light on the tax treatment of these digital assets and how they are classified. It is proposed that in India, crypto
tokens should be recognised as digital assets, rather than currency.
Times of India editorial, 5 September 2021
Studies show around 15 million cryptocurrency owners and users in India, 10 times more than in the UK and not far behind
the 23 million the US can boast.
Certainty has been in short supply. And each update has appeared a false dawn for one of the world’s largest
cryptocurrency markets.
In March 2020 the Supreme Court struck down an RBI decision to restrict cryptocurrency trading, finding the move
illegal.
It is a paradox that blockchain technology is acceptable to RBI, but cryptocurrency is not.
RBI has not applied its mind to the fact that not every cryptocurrency is anonymous. The report of the European
Parliament also classified [digital assets] into anonymous and pseudo-anonymous. Therefore, if the problem sought to be
addressed is anonymity of transactions, the same could have been achieved by resorting to the least invasive option of
prohibiting only anonymous [digital assets].
Supreme Court judgement, Writ Petition (Civil) no 528/2018
Nischal Shetty built India’s largest crypto trading venue — acquired by Binance just two years after launch — but
businesses like WazirX have been effectively blacklisted by the Indian banking sector and have faced court time for
allegedly violating forex laws.
Retail crypto has seen massive growth in the past 12 months: one of the largest exchanges, CoinSwitch Kuber, claims to
have onboarded 8 million customers since June 2020 and raised a $25m Series B funding round in April 2021 for a
valuation of $500m.
So news that India could overcome its crippling indecision to date? A distinct regulatory plan could supercharge the
industry both domestically and internationally.
Markets
BTC/USD
Current sentiment analysis of Bitcoin markets puts traders in ‘extreme optimism’ mode. The world’s largest cryptoasset
recaptured the much-vaunted $50,000 level on around 6 September and across the seven-day trading session swung a total
of 13.4% to the positive, before sliding back 3.5% from a peak of $52,949.22 to end the week at $51,061.44.
ETH/USD
Ethereum is at a tipping point, price wise, hitting its head on the $4,000 price ceiling repeatedly this week. Across
the seven-day trading session, ETH added just x% against the US dollar. A breach of the much-vaunted $4,000 level would
leave the world’s second largest cryptoasset effectively in price discovery. In May 2021, ETH managed just six days
above $4,000 before careening as low as $1,700, before starting the slow ascent back to near its all time highs. Bulls
and long-term investors alike now hope that the market recognises ETH fundamentals as stronger than they ever have been, and that $4,000 becomes the price floor, rather than the ceiling.
LTC/USD
Litecoin went on a tear this trading week, starting at $165.31, blowing through long-term resistance at $200 and
careening on to peak some 40.7% higher at $232.72. Bulls could not sustain that kind of price momentum, however, and LTC
retraced by 13.2% against the US dollar to finish the trading week at $201.84 The market isn’t quite ready for a
near-$240 Litecoin, yet. The technicals suggest that while there is likely much more volatility around the $200-mark, if
LTC can sustain a few trading sessions above this round number, a fresh all time high could be within reach.
Important information:
This article does not constitute investment advice, nor does it constitute an offer or solicitation to buy financial products. This article is for general informational purposes only, and there is no explicit or implicit assurance or guarantee regarding the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. It is advised not to rely on the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. Please note that this article is neither investment advice nor an offer or solicitation to acquire financial products or cryptocurrencies.
Before investing in crypto ETPs, potentional investors should consider the following:
Potential investors should seek independent advice and consider relevant information contained in the base prospectus and the final terms for the ETPs, especially the risk factors mentioned therein. The invested capital is at risk, and losses up to the amount invested are possible. The product is subject to inherent counterparty risk with respect to the issuer of the ETPs and may incur losses up to a total loss if the issuer fails to fulfill its contractual obligations. The legal structure of ETPs is equivalent to that of a debt security. ETPs are treated like other securities.
About Bitwise
Bitwise is one of the world’s leading crypto specialist asset managers. Thousands of financial advisors, family offices, and institutional investors across the globe have partnered with us to understand and access the opportunities in crypto. Since 2017, Bitwise has established a track record of excellence managing a broad suite of index and active solutions across ETPs, separately managed accounts, private funds, and hedge fund strategies—spanning both the U.S. and Europe.
In Europe, for the past four years Bitwise (previously ETC Group) has developed an extensive and innovative suite of crypto ETPs, including Europe’s largest and most liquid bitcoin ETP.
This family of crypto ETPs is domiciled in Germany and approved by BaFin. We exclusively partner with reputable entities from the traditional financial industry, ensuring that 100% of the assets are securely stored offline (cold storage) through regulated custodians.
Our European products comprise a collection of carefully designed financial instruments that seamlessly integrate into any professional portfolio, providing comprehensive exposure to crypto as an asset class. Access is straightforward via major European stock exchanges, with primary listings on Xetra, the most liquid exchange for ETF trading in Europe.
Retail investors benefit from easy access through numerous DIY/online brokers, coupled with our robust and secure physical ETP structure, which includes a redemption feature.
Please confirm the following selection to access the content relevant to you:
Cookie Settings
We use cookies on our site to optimize our services.Learn more
We use cookies on our site to optimize our services.Learn more
Required cookies
These cookies are necessary to ensure the smooth functioning of this website (e.g. session cookies, cookie to store the selected cookie preferences, etc.). These required cookies can thereforce not be deactivated.
Optional cookies
Functional cookies are used to ensure the smooth functioning of all tools on the wesites. The entire and proper function of the webite is available to the user only with the use of functional cookies. The use of analysis cookies serves the ongoing quality improvement of this website and its content. By using them, wa aim to maximise user satisfaction.
Avis Important
Des produits tels que BTCE - ETC Group Physical Bitcoin ("BTCE") sont des Exchange Traded Commodities ("ETC"), instruments financiers considérés comme des titres de créances complexes par l'Autorité des Marchés Financiers présentant des risques difficilement compréhensibles par le grand public. A ce titre, leur distribution en France répond à des règles spécifiques. Il relève de la responsabilité des intermédiaires et investisseurs professionnels souhaitant offrir des ETCs à leurs clients de s'assurer que leur distribution auxdits clients est réalisée dans le respect de la réglementation française.
Terms of website use
Important Notice
Please read these terms carefully before using this website. By clicking on “Accept” and by accessing the website on an ongoing basis, you are deemed to have read, understood and accepted these Terms of Website Use.
The distribution of the information and material on this Website may be restricted by law in certain countries. None of the information is directed at, or is intended for distribution to, or use by, any person or entity in any jurisdiction (by virtue of nationality, place of residence, domicile or registered office) where publication, distribution or use of such information would be contrary to local law or regulation. By clicking on “Accept” and by accessing the website on an ongoing basis you attest that you are a professional investor or are otherwise allowed to access this website pursuant to all applicable laws.
You must not use or attempt to use any automated program (including, without limitation, any spider or other web crawler) to access our system or in relation to this Website.
We may change these Terms of Website Use from time to time. Any changes we may make will be posted on this website. By continuing to use and access this website following such changes, you agree to be bound by any changes we make. Please review this page frequently to see any updates or changes to these Terms.
If you are in the UK, US or Canada
Information available on this website is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering in the United States, to, or for the account or benefit of, any U.S. Person or in Canada, or any state, province or territory thereof, where neither the Issuer nor its products are authorised or registered for distribution or sale and where no prospectus of the Issuer has been filed with any securities regulator. Neither this website nor information it contains should be accessed by a US person or legal entity or taken, transmitted or distributed (directly or indirectly) into the United States.
This document does not constitute an invitation or inducement to engage in investment activity. In the UK, this document is provided for information purposes and directed only at investment professionals (as defined under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended from time to time). It is not intended for use by, or directed at, retail customers or any person who does not have professional experience in matters relating to investment in cryptocurrencies and crypto-backed ETPs. Neither the Issuer nor its products are authorised or regulated by the UK Financial Conduct Authority.
No advice
Nothing on this website should be considered to be investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. All investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
The information on this website is provided for information purposes only. The fact that ETC Group has provided it does not constitute investment advice or a recommendation to buy or sell any particular product or to engage in any other related transaction. The products involve a high degree of risk and are not necessarily suitable for everyone. The products presented in this section of the website are intended for sale only to sophisticated investors who are able to understand and bear the risks involved. They may not be suitable for you.
In preparing the information in this section of the Website, ETC Group has not taken into account your individual investment objectives, financial situation or investment needs. Nothing in the website constitutes or is intended to constitute financial, legal, accounting or tax advice. Neither ETC Group or any affiliate will provide or purport to provide you with investment advice as a result of your use of this website. Accessing this website does not create any contract whereby ETC Group agrees or undertakes to provide you with any information or investment advice. The information on this website is provided solely on the basis that you will make your own investment decisions.
Limitation of Liability
Neither ETC Group nor any of its affiliates, directors, officers or employees shall be responsible or will be liable for any loss or damage including consequential or indirect damage or loss of profit, arising in any way from the use of, or inability to use, this website or any reliance placed on the information it contains. The website is provided on an "as is" basis. Whilst we take all reasonable care to ensure the information published on this website is up to date and as accurate as possible, ETC Group does not guarantee or warrant that this website, or any services or content on it, will always be accurate, available or provided uninterrupted. We may suspend, withdraw, discontinue or change all or any part of this website without notice. We do not guarantee that this website will be secure or free from bugs or viruses. You agree that your use of this website is at your own risk.
Certain documents made available on this Website may have been prepared and issued by persons other than ETC Group. ETC Group is not responsible in any way for the content of any such documents. The website may also contain hyperlinks to external websites that are not under the control of ETC Group. ETC Group does not approve or endorse the contents of such websites and does not control or take any responsibility for the content of any such websites.
Risk Warnings
Cryptocurrencies and products linked to cryptocurrencies are highly volatile.
You can lose some or all of your investment.
Risks of investing are numerous and include market, price, currency, liquidity, operational, legal and regulatory risks.
Exchange traded products do not offer a fixed income or match precisely the performance of the underlying cryptocurrency.
Investment in cryptocurrencies and products linked to cryptocurrencies are only suitable for experienced investors and you should seek independent advice and check with your broker prior to investing.
All investors should read the relevant base prospectus and final terms contained on this website before investing and, in particular, the section entitled ‘Risk Factors’ for further details of risks associated with an investment.
General
The website is owned and operated by ETC Management Ltd, a company registered in England and Wales under number 12165332 with its registered office at Gridiron, One Pancras Square, London, England, N1C 4AG. You can contact us by email at info@etc-group.com.
References to “ETC Group”, “we”, “us” and “our” in these Terms of Website Use refer to ETC Management Ltd and our affiliates.
All content and the design of this Website are owned by ETC Group or our licensors and protected by copyright and other applicable laws. Any copying of the website or of its content requires the prior written consent of ETC Group.
ETC Group respects the privacy of users. Please see our Privacy Policy for information setting out how we handle personal information collected through the Website.
The products displayed on this website are not available for subscription or purchase by retail investors in your selected jurisdiction. Please contact your broker or financial adviser for further information.
Important Notice:
The distribution of the information and material on this website may be restricted by law in certain countries. None of the information is directed at, or is intended for distribution to, or use by, any person or entity in any jurisdiction (by virtue of nationality, place of residence, domicile or registered office) where publication, distribution or use of such information would be contrary to local law or regulation.
The products on this website are not intended to be offered and shall not be offered to any private investor.
Important information:
The distribution of the information and material on this Website may be restricted by law in certain countries. None of the information is directed at, or is intended for distribution to, or use by, any person or entity in any jurisdiction (by virtue of nationality, place of residence, domicile or registered office) where publication, distribution or use of such information would be contrary to local law or regulation.
If you are a UK professional investor and want more information on the products, please visit www.hanetf.com. For professional investors only. Capital at risk.