Monthly Review of August 2023

In this monthly review, we will examine the most significant cryptocurrency-related news in August. The major cryptocurrency headlines for August were related to positive ETF news from the United States and Europe, as well as PayPal's launch of a stablecoin on the Ethereum network.

              
August in the Cryptocurrency Markets
Cryptocurrency prices experienced some significant movements within a single day in August. Ultimately, the month was negative for cryptocurrency price movements, as the prices of nearly all cryptocurrencies were in decline in August. Among the cryptocurrencies offered by Northcrypto, the largest by market capitalization, Bitcoin and Ethereum, saw their prices drop by approximately ten percent during the month. Aave and Polygon experienced declines of less than 15 and 20 percent, respectively. Chainlink and ApeCoin prices dropped by slightly over 20 percent, while Litecoin experienced a decrease of around 30 percent. The decline in the cryptocurrency market was influenced by various factors, including macroeconomic factors such as record-high government bond yields in many years, as well as internal factors in the cryptocurrency market, such as rumors of SpaceX selling its Bitcoin holdings and the liquidation of leveraged positions.
Positive ETF News from the United States and Europe
Grayscale, specializing in cryptocurrency funds, achieved a significant victory in August in a legal battle against the U.S. Securities and Exchange Commission (SEC). The U.S. Federal Court of Appeals ruled that the SEC had rejected Grayscale's application to convert its Bitcoin fund, Grayscale Bitcoin Trust, into a Bitcoin spot ETF with inadequate justification. An ETF refers to an exchange-traded fund, while a spot ETF refers to an ETF with underlying assets, in this case, bitcoins. Although the decision does not immediately convert Grayscale's Bitcoin fund into a Bitcoin spot ETF, many cryptocurrency experts view it as a significant step toward the approval of the first Bitcoin spot ETF. Following this news, Bitcoin and the entire cryptocurrency market saw a substantial increase in prices on August 29th.
While the first Bitcoin spot ETF is still awaiting approval in the United States, the first Bitcoin spot ETF was launched in Europe in mid-August. The Jacobi FT Wilshere ETF, managed by British firm Jacobi Asset Management, became available for trading on the Amsterdam Euronext exchange. Since this is a spot ETF, it means that the ETF shares are backed by bitcoins, rather than just Bitcoin futures. The ETF's original launch was postponed due to unfavorable market conditions, among other factors.
In August, there was also positive news from the United States regarding Ethereum ETFs. According to Bloomberg, which specializes in financial news and data, the SEC is ready to approve the first Ethereum futures ETF in the near future. The SEC currently has several Ethereum futures ETF applications under consideration, and according to Bloomberg, many of these may be approved by October. These ETFs would include futures contracts instead of actual ether, which are derivative contracts to buy or sell the underlying asset at an agreed-upon price at a specified future date. The SEC approved the first Bitcoin futures ETF in late 2021.
Payment Giant PayPal Launches Ethereum-Based Stablecoin
PayPal, one of the world's largest digital payment companies, launched the PayPal USD (PYUSD) stablecoin on the Ethereum network in August, in collaboration with blockchain and cryptocurrency service provider Paxos. Stablecoins are cryptocurrencies designed to maintain a stable value relative to, for example, the U.S. dollar, which is also the case with PYUSD. One of PayPal's main objectives with PYUSD is to seamlessly integrate traditional fiat currencies and cryptocurrencies.
Lufthansa to Launch NFT-Based Loyalty Program on Polygon
Lufthansa Group, the world's fourth-largest airline, announced at the end of August that it would be launching an NFT-based loyalty program on the Polygon network. Subsidiaries of Lufthansa Group, such as Lufthansa, Austrian Airlines, and Swiss International Air Lines, will participate in the loyalty program. In practice, the loyalty program allows travelers to collect digital collectible cards. These cards can provide users with special benefits, such as frequent flyer miles and access to airport lounges.
Oman's Government Invests in Bitcoin Mining Project
The Middle Eastern country of Oman, with approximately 4.5 million inhabitants, is investing in a Bitcoin mining facility that is expected to gather investments of over a billion euros. Oman's government states that this initiative aligns with its goal to diversify the economy while integrating modern technologies and respecting ethical and environmentally sustainable practices. The Bitcoin mining facility will utilize environmentally sustainable energy sources, such as natural gas produced as a byproduct of oil production and hydropower.
Rumors of SpaceX Selling Bitcoin Holdings
One of the factors contributing to the cryptocurrency price drop that occurred on August 17th–18th was the news related to SpaceX. According to The Wall Street Journal, the space exploration company owned by Elon Musk, SpaceX, marked down the value of its Bitcoin holdings by approximately 343 million euros over the last two years. The Wall Street Journal reported that this essentially means that SpaceX sold its Bitcoin holdings during that period. Elon Musk had announced SpaceX's Bitcoin purchases in 2021.
Summary
Several of the most significant news stories in August were related to ETF developments in the United States and Europe. Grayscale's victory against the SEC increased the likelihood of the first approved Bitcoin spot ETF in the United States. Currently, the question is when this will happen, according to many cryptocurrency experts. The approval of a Bitcoin spot ETF in the United States is seen as a highly significant event, with many anticipating it could serve as a catalyst for the next cryptocurrency bull market. In Europe, the launch of the Bitcoin spot ETF by Jacobi Asset Management in mid-August is a tangible indication of Europe's advantage over the United States in cryptocurrency regulation matters. Additionally, Europe's position is expected to improve further with the implementation of the MiCA cryptocurrency legislation next year.
Positive news also emerged from the United States regarding Ethereum ETFs in August. Bloomberg reported that the SEC is ready to approve the first Ethereum futures ETF in the near future. This is seen as a positive development for Ethereum, as it would make Ethereum more accessible to institutional investors in the United States. Another significant Ethereum-related news in August was PayPal's launch of the PYUSD stablecoin on the Ethereum network. This move by PayPal has the potential to significantly increase Ethereum's popularity and user base, given PayPal's global user base of over 430 million active users.
Other significant news in August was related to Lufthansa's NFT-based customer loyalty program set to launch on Polygon, Oman's decision to invest in a substantial Bitcoin mining project, and rumors of SpaceX selling its Bitcoin holdings. Drawing conclusions about SpaceX's possible sale of Bitcoin holdings is challenging, as there has been no official announcement from SpaceX, and the sale may have occurred for Bitcoin-related or unrelated reasons. However, from the perspective of Polygon and Bitcoin, positive conclusions can be drawn regarding the Lufthansa and Oman news. Lufthansa's loyalty program illustrates the practical applications of blockchain technology and NFTs. Furthermore, this news can be seen as a continuation of the Starbucks partnership that began last year. Oman's decision to invest in a Bitcoin mining project, on the other hand, serves as a practical example of recognizing the vast opportunities offered by Bitcoin mining, promising a positive outlook for both Bitcoin and the future of Bitcoin mining.

Ville Viitaharju
Cryptocurrency specialist