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Over the past few years, Bitcoin outperformed Tesla in terms of market growth, with a remarkable 1,180% increase compared to Tesla's 806%. Bitcoin’s growth and the approval of spot Bitcoin ETFs has helped it rank as the ninth-largest asset globally. Fidelity's Bitcoin ETF has even attracted a record $40M investment from traditional financial advisers. However, Bitcoin could also face some hurdles soon, like the potential market impact from the upcoming return of over $9 billion in Mt. Gox Bitcoin and ongoing security concerns with El Salvador's Chivo wallet.
Bitcoin Outshines Tesla
Bitcoin has seen some great gains over the past five years which even allowed it to surpass the growth of Tesla's stock. BTC’s price rose by over 1,180%, while Tesla's shares increased by 806% during the same period. The crypto king’s performance over shorter time frames was just as impressive, with a 139% rise over the past year compared to Tesla’s 11% decline. Year-to-date figures also show that Bitcoin is up by 49%, whereas Tesla has decreased by 42%.
World’s 10 largest assets by market capitalization (Source: Companiesmarketcap)
This growth has positioned Bitcoin as the world’s ninth-largest asset, with a market cap of around $1.3 trillion. This valuation is higher than that of major companies like Meta Platforms, Berkshire Hathaway, Visa, and JPMorgan Chase. In contrast, Tesla is ranked as the 21st largest asset with a market cap of $455 billion.
Tesla’s relationship with Bitcoin started in February of 2021, when it bought more than $1.5 billion worth of the cryptocurrency at around $36,000 per unit. Despite selling about 10% of its holdings in March 2021 and 75% in the second quarter of 2022, Tesla still has 11,509 BTC, which is currently valued at over $766 million. If Tesla kept all of its Bitcoin holdings, it could have seen profits higher than $1.27 billion.
The surge in Bitcoin’s price this year has been largely attributed to the approval of ten United States spot Bitcoin exchange-traded funds (ETFs). These ETFs have contributed a lot to Bitcoin's credibility as a mainstream asset class, attracting huge amounts of trading volumes and capital. Cumulatively, these ETFs hold over 835,000 BTC, valued at more than $55.1 billion.
Fidelity’s Bitcoin ETF Gains Momentum
Bitcoin ETFs are doing so well that Fidelity's FBTC recently set a new record for the largest single investment in a Bitcoin fund, with $40 million collectively invested by two traditional U.S. financial advisers. Legacy Wealth Management and United Capital Management of Kansas each invested $20 million, becoming top shareholders in the fund. Legacy oversees more than $359 million in assets, and United Capital manages over $436 million, with Bitcoin taking up 6% and 5% of their portfolios respectively.
This milestone was revealed in recent 13F form filings with the U.S. Securities and Exchange Commission for the first quarter of 2024. Bloomberg analyst Eric Balchunas believes that these investments certainly suggest a growing trend of adoption among traditional investors. He even labeled the move emblematic of a "Boomer" approach to Bitcoin investment. He is also hopeful that this development is likely encouraging for those supporting long-term cryptocurrency adoption.
Despite these investments, the overall market sentiment towards Bitcoin ETFs has shown some signs of stagnation. CryptoQuant CEO Ki Young Ju pointed out that demand for these funds has not increased since reaching a peak in March 2024. Furthermore, on Apr. 15, Bitcoin ETFs reported net outflows of $36.7 million. Jim Bianco, founder of Bianco Research, also recently shared his disappointment about the first-quarter allocation data, pointing out concerns over shrinking unrealized gains amidst fluctuating Bitcoin prices.
Despite Fidelity's fund being the second-largest Bitcoin ETF with over $10 billion in assets, trailing behind BlackRock's iShares Bitcoin Trust that holds more than $18 billion, the sector seems to be experiencing a slowdown in new investor interest.
Block Announces Full Bitcoin Mining System
Meanwhile, payments company Block, previously known as Square, unveiled plans to launch a new Bitcoin mining system. Block completed development of a three-nanometer chip specifically designed for BTC mining, which led to the announcement of a full Bitcoin mining system. Block previously completed a prototype five-nanometer BTC mining chip in May of 2023.
Block's journey into Bitcoin mining started under the guidance of CEO Jack Dorsey in October 2021, when he advocated for a more decentralized approach to Bitcoin mining. The company has since engaged extensively with Bitcoin miners to understand and address the challenges they face. These challenges range from the centralization of chip manufacturing, which Block sees as detrimental to the mining ecosystem, to issues about the acquisition of mining equipment, maintenance, transparency, and software problems.
The firm’s new mining system will include both the standalone mining chip and a comprehensive mining setup designed by Block. Block also asked the mining community for ongoing feedback to help them further refine and optimize their system.
Over $9 Billion in Mt. Gox Bitcoin Set to Return to Market
On the other hand, the looming return of more than $9 billion in Bitcoin from the defunct Mt. Gox crypto exchange could potentially unsettle the crypto market, according to K33 Research analysts. Updates spotted by creditors on a Reddit forum earlier this week suggest that repayment in cryptocurrency might start soon, possibly as early as next month.
Analysts Anders Helseth and Vetle Lunde from K33 Research believe that the distribution of 142,000 BTC and 143,000 BCH to Mt. Gox's 127,000 creditors could put negative price pressure on Bitcoin and Bitcoin Cash. The total amount due includes over $9.4 billion in Bitcoin, $72 million in Bitcoin Cash, and approximately $445.8 million in fiat (69 billion Japanese yen).
The potential market impact is referred to as an "overhang," suggesting that even the possibility of these large volumes hitting the market could "spook" investors. This is relevant while there are a number of other other market-moving factors at play at the moment, including recent volatility driven by geopolitical tensions in the Middle East and the effects of the Bitcoin halving event on Apr. 20.
The return of these funds marks an important moment for creditors who have been waiting for the recovery of their assets for over a decade since Mt. Gox collapsed in 2014 after a series of security breaches. The process of verifying creditor identities and preparing for crypto repayments began in January, while some fiat repayments were already processed last December and March.
Mt. Gox has set a final deadline of Oct. 31, 2024, for all repayments, although this timeline may still change.
Chivo Wallet Hack Continues
On another negative note for Bitcoin, the saga surrounding El Salvador’s state-operated Bitcoin wallet, Chivo, is still going on as hackers continue to expose sensitive information. Recently, the hacker group CiberInteligenciaSV released part of the source code related to Chivo’s ATM network on the black hat hacking forum, BreachForums. This comes after earlier incidents in April where the personal data of approximately 5.1 million Salvadorans was compromised, nearly covering the adult population of the country.
On Apr. 23, the hacker group declared on BreachForums that they intend to share the internal workings of the Chivo Bitcoin wallet ATMs. Additionally, CiberInteligenciaSV's Telegram channel hinted at even more releases, including source code and VPN access information.
The file named Codigo.rar, posted by the hackers, contains a collection of code and VPN credentials specifically from the Chivo Wallet ATM network. This development adds to the ongoing concerns about cybersecurity in relation to El Salvador’s pioneering move to adopt Bitcoin as legal tender in September of 2021. Despite the government's promotion of Chivo as the official BTC wallet for its citizens, the platform has been plagued by various technical issues since its launch.
To date, the Salvadoran government has not formally addressed the April hack or the subsequent data exposures. This silence only adds to the growing uncertainty about the security and stability of the Chivo wallet system.
