The central theses
- Bitcoin hit another high early last week, but ended significantly lower.
- Fees on various Ethereum Layer 2 networks fell dramatically last week following the Dencun upgrade, but Ether prices also fell.
- Prosecutors recommended a prison sentence of up to 50 years for the former FTX CEO in the trial of Sam Bankman-Fried.
- Digital asset manager Grayscale filed for a second Bitcoin exchange-traded fund (ETF) to use the BTC ticker.
- This week, analysts are tracking inflows into Bitcoin ETFs, and March's numbers have already dwarfed those from January and February.
What happened in the crypto markets last week?
Last week proved to be a roller coaster ride for Bitcoin (BTC) investors, as the largest cryptocurrency by market cap hit another lifetime high of $73,000 earlier in the week, but fell below $65,000 on Sunday following a sell-off . Ethereum's Dencun upgrade achieved its intended goal by reducing fees on various Layer 2 networks, but Ether (ETH) prices also weakened at the end of the week.
Elsewhere, prosecutors recommended that former FTX chief executive officer (CEO) Sam Bankman-Fried be sentenced to up to 50 years in prison on fraud and money laundering charges. Additionally, digital asset manager Grayscale Investments has filed for a second spot Bitcoin ETF to offer lower management fees.
The Dencun upgrade results in lower fees on Ethereum Layer 2 networks
Following the Dencun upgrade on the Ethereum mainnet on March 13, Ethereum Layer 2 (L2) protocols experienced a notable reduction in transaction fees, with some protocols reducing fees by up to 99%. Hailed as a crucial scalability-focused upgrade, Dencun is being hailed as one of Ethereum's most significant advances since The Merge.
Well-known L2 protocols saw an impressive 99% drop in gas fees after the upgrade, with current fees dropping to 2.7 cents for some like Starknet. The introduction of data blobs over EIP-484 during the Dencun hard fork has improved transactional data processing, providing faster and cheaper transactions for L2s.
Prosecutors recommend up to 50 years in prison for former FTX CEO Bankman-Fried
Federal prosecutors are arguing for a hefty sentence of up to 50 years for disgraced cryptocurrency wunderkind Sam Bankman-Fried, according to court documents released Friday. Bankman-Fried, the former CEO and co-founder of failed cryptocurrency exchange FTX, was convicted of multiple crimes, including wire fraud and money laundering.
Prosecutors argue that his actions warrant a sentence commensurate with the scale of his crimes and emphasize the need for justice given the widespread harm and blatant disregard for the law. As sentencing day approaches on March 28, the severity of the recommended sentence stands in stark contrast to the comparatively lenient request from Bankman-Fried's legal team.
Grayscale files for new Bitcoin ETF with BTC ticker
Digital asset manager Grayscale Investments made headlines last Tuesday when it filed to spin off its Grayscale Bitcoin Trust (GBTC), a move intended to give investors more cost-effective exposure to Bitcoin.
The spin-off is intended to reduce the fees associated with GBTC and is in response to investors' preference for lower-cost alternatives, particularly as GBTC's fees were comparatively higher than its competitors. Grayscale plans to launch the Grayscale Bitcoin Mini Trust – which will hold a portion of the Bitcoins currently held by GBTC – with existing GBTC shareholders receiving shares in the Mini Trust in exchange.
Despite Bitcoin's rise to record highs, GBTC has seen significant capital outflows of more than $11 billion since January, compared to inflows in rival ETFs such as BlackRock's iShares Bitcoin ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC). While Grayscale has not yet finalized fees for the Mini Trust, the spin-off, following regulatory approval earlier this year, signals a strategic move toward independent operations for both GBTC and the Mini Trust, marking a significant development in the evolving landscape which presents Bitcoin investment opportunities.
What to expect in the markets this week
Spot Bitcoin ETF volumes in March are already much larger than in January and February. Additionally, BlackRock has accumulated more than 230,000 Bitcoin through its IBIT offering. However, inflows appear to be slowing after peaking at more than $1 billion on March 12, according to data from Farside Investors. This week, analysts will be watching to see whether inflows into these ETFs continue to decline.
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