After a few weeks of cryptocurrency turbulence, June opened with a historic development. At the 2021 Bitcoin Conference in Miami – the world’s largest cryptocurrency event – Nayib Bukele, President of El Salvador, announced that the nation would adopt Bitcoin as legal tender. On June 8, 2021, the El Salvadoran Congress approved President Bukele’s proposal to embrace the cryptocurrency, making it the first country in the world to formally recognize Bitcoin as legal tender. Despite the relatively small size of its economy, this is a historic move that will have huge global implications – notably, throughout Latin America, with nations like Paraguay and Panama expected to push similar legislation this summer.
As soon as another country legalizes Bitcoin and starts transacting with El Salvador, all the banking rails will be expected to adopt cryptocurrencies. They will no longer be able to ignore it or shut it down as it will be classified as a genuine, legal asset and form of payment. El Salvador could be the spark that ignited the powder keg.
Market Commentary
In May, CoinShares – London’s largest digital asset manager – revealed institutions had abandoned Bitcoin for Ethereum. At the start of May, Bitcoin saw a record $98M worth of outflows, while Ethereum saw a respectable $27M worth of inflows. Interestingly, CoinShares reported outflows of this nature as “pivotal points in sentimental change”for digital assets.
In a collaboration between New Digital Investment Group (NYDIG) and Fidelity National Information Services (FIS), participating banks can now offer crypto trading for their customers directly from their existing accounts. Patrick Sells, NYDIG Executive, stated traditional US banks have shown interest in the space. He also said he expects industry giants such as JPMorgan and Bank of America to provide crypto offerings once smaller banks begin to steal market share away from retail crypto trading platforms like the commission-free brokerage firm Robinhood.
Bitcoin ETFs also came back into vogue as an increasing number of institutions fight to issue and become the first US regulatory approved Bitcoin ETF. The SEC is reviewing Skybridge’s ETF application and Wise Origin’s Bitcoin Trust application. If approved, Skybridge’s ETF will trade on the NYSE, and Wise Origin’s ETF will trade on Chicago Board Options Exchange’s BZX exchange.
Albert Isola, Gibraltar’s Minister for Digital and Financial Services, believes the first US ETF will be approved this year, which will cause the US equities market to become flooded with Bitcoin ETFs. With Canada’s recent approval of two Bitcoin ETF applications, the pressure is on to approve a Bitcoin ETF in the US to remain competitive within the global financial system.
Is the Crypto Market Overheating?
What many cryptocurrency traders refer to as a “Dinocoin”due to the market’s diminishing interest since the token’s launch during the 2017 bull run, Ethereum Classic gained 300% in one week of trading as a wave of retail investors accidentally bid up the token in place of Ethereum. The blunder caused Ethereum Classic’s market cap to swell as high as $17B, causing the token to become the 13th largest cryptocurrency by market cap.
Meanwhile, several dog-based meme coins are attempting to piggyback off Dogecoin’s recent success among the retail trading community. The most famous Dogecoin imitator, Shiba Inu (SHIB), a token based on the Japanese dog breed, surged 2,500% in its first three days of trading. SHIB’s market cap hit an all-time high of $13.5B. LEASH, the sister token of SHIB, gained 2.5M% since the start of the month, while Dogelon Mars (ELON), a token meant to represent Elon Musk’s affinity for Dogecoin, gained 220% in 14 days of trading.