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Prepare For A Solana Sell-Off: How Grayscale’s 2025 Unlocks Could Shake The Market

On Thursday, as the broader cryptocurrency market showed signs of recovery, Solana (SOL), one of the leading altcoins, surged past the $200 mark, reflecting an 8% increase over the past 24 hours. 

This upward momentum brings the sixth-largest cryptocurrency by market capitalization closer to its all-time high achieved in November 2024. However, market experts caution that Solana may face significant pressure in the coming days.

A Double-Edged Sword For Solana Investors

Ben Lilly, a market analyst at Jarvis Labs, recently highlighted potential risks tied to the “Grayscale Effect.” In a social media post, he warned that the upcoming Grayscale SOL tokens unlock could create substantial selling pressure on the altcoin. 

Grayscale, a prominent digital asset management company, enforces a policy to protect assets for 12 months following acquisition. As the two major unlocking periods near—January 24 to February 2 and July 24 to August 7—Lilly warns that investors should stay alert.

The mechanics of the Grayscale Trust are similar to those seen in the past with the Grayscale Bitcoin Trust (GBTC). In that case, investors would purchase Bitcoin (BTC) through Grayscale, which would hold the assets for a period before issuing shares. 

This created a premium, where the shares traded at a higher price than the actual Bitcoin price, leading to significant market rallies. 

However, when that premium disappeared, it marked the peak of the market in 2021, resulting in a cascade of failures for firms like Three Arrows Capital, BlockFi, Celsius, and Voyager.

Potential Price Drop Ahead For SOL’s Price

Lilly points out that Grayscale is now executing a comparable strategy with Solana, and the upcoming unlocks could mirror the past volatility seen in the crypto market. 

The analyst notes that previous large purchases of SOL tokens saw private placements unlocked from late July 2024, during which the price dropped by 40% in just ten days. 

The concern is that the same trend may emerge with the January 2025 unlocks, potentially leading to a significant sell-off. The analysis suggests that when investors who benefited from the premium in the past go to sell their holdings, they may flood the market, creating downward pressure on the SOL price. 

Lilly recommends that Solana holders consider selling in advance of the January 24 unlock date, as this could mark a critical turning point for the asset.

While the Grayscale Trust for Solana is relatively small compared to the overall market cap of SOL, the potential impact on price cannot be overlooked. 

According to Lilly’s analysis, historical trends indicate that even small unlocks can significantly influence market behavior. He reassures that while the upcoming sell pressure may not lead to catastrophic losses, it could result in local tops and a decrease in premiums.

Solana

As of this writing, SOL is priced at $205, decreasing slightly more than 20% from its peak of $263 attained on November 24 last year.

Featured image from DALL-E, chart from TradingView.com

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New Grayscale ETF Aims To Include Major Cryptos: Bitcoin, Ether, Solana, And XRP

Crypto asset manager Grayscale is in the process of converting its Grayscale Digital Large Cap Fund (GDLC) into an exchange-traded fund (ETF), according to Bloomberg ETF expert Eric Balchunas. 

The strategic move aims to provide investors with a diversified portfolio that includes major digital assets such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP and Avalanche (AVAX).

Diversified Exposure To Bitcoin, Ethereum, And More

The proposed ETF comes at a time when investor interest in regulated cryptocurrency products is on the rise. Grayscale’s Digital Large Cap Fund currently holds approximately $524 million in assets under management, with a significant focus on Bitcoin and Ethereum. 

Specifically, about 75% of the fund is allocated to Bitcoin, while Ethereum comprises roughly 19%, with the remaining investments distributed among Solana, XRP, and Avalanche. 

According to reports on the matter, this diversified approach is designed to offer a balanced entry point for investors seeking broader exposure to the cryptocurrency market.

The New York Stock Exchange (NYSE) had previously filed a 19b-4 application on behalf of Grayscale, seeking the Securities and Exchange Commission’s (SEC) approval to amend its rulebook to permit the listing of this new ETF. 

This filing follows a pivotal year for the market, which recently saw the approval of spot ETFs for Bitcoin and Ethereum in January and July respectively, allowing these funds to hold actual tokens rather than relying on futures contracts. 

This shift comes after years of rejections of such index funds, spurred by a court ruling in favor of Grayscale that prompted the Securities and Exchange Commission led by Gary Gensler to reconsider its stance.

Grayscale Aims For Fifth ETF Launch This Year

The successful conversion of Grayscale’s Digital Large Cap Fund into an ETF would mark the fifth launch by the firm this year, highlighting its strategy to expand its product offerings in response to increasing demand for diverse digital asset exposure. 

Balchunas noted that the ETF’s holdings, predominantly consisting of Bitcoin and Ethereum, could provide enough flexibility to accommodate smaller, less liquid assets, potentially paving the way for approval.

Over the course of the year, Grayscale’s Bitcoin and Ethereum funds have seen significant outflows, with around $20 billion and $3 billion withdrawn respectively.

In response, the firm has introduced lower-fee versions of these funds, attracting over $700 million in inflows thus far. These approvals have contributed to a surge in Bitcoin and Ethereum prices, indicating a renewed investor confidence in the cryptocurrency market.

Other asset managers are also positioning themselves to launch ETFs that include smaller tokens such as Solana, XRP and Litecoin, with recent filings from Canary Capital and Bitwise Invest highlighting a broader trend to integrate a wider range of cryptocurrencies into regulated investment vehicles, despite increased scrutiny from regulators in the US.

Grayscale

At the time of writing, the largest cryptocurrency on the market, BTC, is trading at $67,750, up a substantial 11% on a weekly basis. 

Featured image from DALL-E, chart from TradingView.com

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Grayscale’s Bullish Forecast: The Top 20 Crypto To Watch In Q4

Crypto asset manager Grayscale has published an in-depth report outlining sectors poised for bullish growth in the final quarter of the year amid a notable recovery in the cryptocurrency market, particularly for major players such as Bitcoin (BTC) and various altcoins, which have reached price levels not seen in over two months.

Grayscale Highlights Key Trends In Crypto

In its Thursday report, Grayscale updated its Crypto Sectors Indexes, showcasing emerging themes within the digital asset industry. Key trends include the rise of decentralized artificial intelligence (AI) platforms, efforts to tokenize traditional assets, and the growing popularity of memecoins. 

Notably, Bitcoin and the cryptocurrency sector have outperformed other market segments in 2024, likely due to the successful launch of spot Bitcoin exchange-traded products (ETPs) in the US earlier this year and favorable macroeconomic conditions following the Federal Reserve’s (Fed) interest rate cut on 18 September.

While gaining 13% this year, Ethereum has underperformed Bitcoin but still surpassed many other cryptocurrencies. Grayscale’s Crypto Sectors Market Index (CSMI) has seen a slight decline of about 1% year-to-date, with the Smart Contract Platforms Crypto Sector Index down approximately 11%, making Ethereum’s performance relatively stronger than its peers. 

Despite its challenges, the asset manager finds that Ethereum remains the Smart Contract Platforms sector leader, boasting the highest number of applications, developers, and fee revenue.

Top 20 Cryptocurrencies For Upcoming Quarter

In producing its quarterly Top 20 list of cryptocurrencies, Grayscale thoroughly analyzes hundreds of digital assets. This list represents a diversified selection of assets with high potential for the upcoming quarter. 

Among those highlighted by the firm are standout performers such as Sui (SUI), Bittensor (TAO), Optimism (OP), Helium (HNT), Celo (CELO) and the UMA Protocol (UMA). However, below is the full list with other assets beyond these to which Grayscale pays particular attention. 

Crypto

Sui, a third-generation blockchain created by former Meta engineers, has made waves following a recent network upgrade that enhanced its transaction speed by 80%, surpassing Solana’s capabilities. 

Optimism, an Ethereum Layer 2 solution, plays a critical role in scaling the Ethereum network. It has developed a framework called the “Superchain,” which is utilized by platforms like Coinbase’s Layer 2 BASE.

Celo and UMA are capitalizing on unique trends, with Celo focusing on stablecoin use and payment solutions in developing regions, particularly in Africa. The platform recently surpassed Tron in stablecoin usage, while UMA serves as an oracle network for decentralized applications like Polymarket.

Helium’s inclusion in the Top 20 reflects Grayscale’s preference for category leaders with sustainable revenue models. The project has established itself as a leader in decentralized physical infrastructure networks (DePIN), growing its network to over one million hotspots and generating significant fee revenues.

Bittensor, which focuses on the intersection of AI and crypto, has recently gained recognition within Grayscale’s framework due to improvements in market structure, offering a decentralized platform for AI innovation.

In this quarter’s adjustments, Grayscale has rotated out several assets, including Render, Mantle, ThorChain, Pendle, Illuvium, and Raydium. While Grayscale sees value in these projects, the revised Top 20 list aims to offer more compelling risk-adjusted returns for investors in the coming months.

Crypto

At the time of writing, the biggest winner across all time frames in Grayscale’s top 20 list is Bittensor’s TAO token, which has seen gains of 86% over the fourteen-day time frame and a substantial 841% year-to-date, resulting in a current trading price of $536. 

Featured image from DALL-E, chart from TradingView.com 

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Grayscale XRP Trust Surges 11.44% One Week After Launch, Here’s The Catalyst

Grayscale’s XRP trust has grown noticeably since launch, a development which spells positive momentum for the digital asset. As one of the leading cryptocurrency asset managers in the world, Grayscale’s decision to unveil the first XRP trust in the US last week signaled the beginning of an institutional influx of funds into the cryptocurrency. Since its debut, the Grayscale XRP Trust has performed remarkably well. Data indicates that the trust’s value has surged by 11.44%, a clear indication of strong demand from institutional investors.

Value Of Grayscale XRP Trust Rallies

Grayscale’s XRP trust tracks the price of the altcoin, and investors buy shares of the trust to gain exposure to the cryptocurrency. When talking about the momentum building behind Grayscale’s XRP trust, we are looking at its Net Asset Value (NAV). The NAV is a measure of the value of each share in the trust and is calculated after every business day. A rising NAV is an indicator of increased institutional investment in the trust. As such, an increase in the NAV relates to a bullish sentiment among traders and the spot price of XRP. 

According to the manager’s website, NAV for the XRP trust currently stands at $11.79, which translates to an increase of slightly above 11.4% in just one week after launch. This impressive rise is not a result of chance but rather the outcome of several positive developments within the broader XRP ecosystem, which work together to signal the continuation of positive momentum.

Grayscale XRP trust

What Is Driving The Momentum?

One of the primary drivers behind this bullish momentum is the highly anticipated launch of Ripple’s USD stablecoin, RUSD. The upcoming stablecoin has generated considerable excitement in the cryptocurrency community, as it is expected to play a pivotal role in enhancing liquidity and cross-border payment solutions. The stablecoin is set to debut before the end of the year, but institutional investors are cautiously awaiting further regulatory clarity from the SEC before making larger moves into the market.

Another factor boosting confidence in XRP is the recent inclusion of the cryptocurrency on the European version of Robinhood. As one of the largest trading and investment platforms, this is a major achievement for the cryptocurrency because it opens up adoption to the large European market.

Lastly, the launch of the Grayscale XRP Trust itself has reignited hopes that a Spot XRP Exchange-Traded Fund (ETF) could soon follow. While no concrete applications have been made by any investment companies, the creation of the Grayscale XRP trust is seen as a critical first step toward the eventual approval of a Spot XRP ETF.

At the time of writing, the altcoin has been trading at $0.59, which has been up by 1.17% in the past 24 hours. 

XRP price chart from Tradingview.com

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MKR Jumps 5% As Grayscale Adds MakerDAO To Its Crypto Fund Lineup

To further diversify its crypto investment portfolio, asset manager and ETF issuer Grayscale has unveiled the launch of the Grayscale MakerDAO Trust. This latest addition to Grayscale’s product suite allows investors to gain exposure to MKR, the utility and governance token underpinning the Ethereum-based MakerDAO ecosystem.

Grayscale Expands Crypto Portfolio

MakerDAO is an autonomous organization operating a decentralized finance (DeFi) protocol, providing users access to a permissionless, open stablecoin system and various other on-chain financial services. 

According to Tuesday’s announcement by the firm, through the Grayscale MakerDAO Trust, investors can now participate in the growth and development of the protocol’s MKR ecosystem.

“As demand for crypto exposure continues to grow, Grayscale is committed to expanding our suite of products and providing innovative investment opportunities,” said Rayhaneh Sharif-Askary, Grayscale’s Head of Product & Research.

“The launch of the Grayscale MakerDAO Trust allows investors to experience the growth of the entire MakerDAO ecosystem, aiming to remove DeFi’s dependency on traditional finance infrastructure by providing a permissionless, decentralized, and open stablecoin system,” Sharif-Askary also stated.

The new trust functions similarly to Grayscale’s other single-asset investment vehicles, with the fund solely invested in MKR tokens. The trust is now open for daily subscription by eligible individual and institutional accredited investors, providing them a convenient way to gain exposure to the MakerDAO protocol.

This announcement comes on the heels of Grayscale’s recent launches of the Grayscale Bittensor Trust, dedicated to the TAO token supporting the Bittensor Protocol, and the Grayscale Sui Trust, focused on the SUI token underpinning the Sui Layer 1 blockchain.

MKR Price Action

Grayscale’s news sparked a spike in the MKR token, which hit an 8-month low of $1.7 on August 5 amid the broader market crash and global economic uncertainties that led to an increased sell-off. 

MKR is trading at $2.10, up nearly 6% in the last few hours, coupled with a 16% increase in trading volume in the 24-hour time frame, amounting to $124 million, indicating investor interest in the token’s prospects. 

MKR must consolidate above the $2.06 level to further capitalize on this latest surge, as it has acted as a resistance wall for the token over the past few days before Tuesday’s bullish news on the MKR/USDT daily chart. This would be key for MKR’s future advances and the potential to surpass its next resistance barrier at $2.16. 

However, if there is a resurgence of demand and buying pressure for the token and the broader market, which can also contribute to MKR’s 10% surge last week, it would position MakerDAO’s native token to tackle its next resistance at $2.31, $2.42 and $2.73 on its way to reclaiming the $3 mark. 

Grayscale

Featured image from DALL-E, chart from TradingView.com 

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Grayscale Introduces New Crypto Funds For TAO & SUI, Triggering Price Responses

Grayscale Investments, one of the world’s largest crypto asset managers and exchange-traded fund (ETF) issuers has unveiled its latest offerings. On Wednesday, the company announced the launch of two new crypto mutual funds: the Grayscale Bittensor Trust and the Grayscale Sui Trust.

Grayscale Unveils Bittensor And Sui Trusts

According to the announcement, the Grayscale Bittensor Trust is exclusively dedicated to TAO, the token supporting the Bittensor Protocol, which incentivizes the advancement of open-source artificial intelligence (AI) technologies.

In parallel, the Grayscale Sui Trust focuses solely on SUI, the token underpinning the Sui protocol, a Layer 1 (L1) smart contract blockchain designed to facilitate globally scalable decentralized applications.

Rayhaneh Sharif-Askary, Grayscale’s Head of Product & Research, expressed enthusiasm about the new additions, emphasizing the “pivotal roles” Bittensor and Sui play in the decentralized AI and smart contract blockchain realms, respectively. Sharif-Askary said:

With the launch of Grayscale Bittensor Trust and Grayscale Sui Trust, we continue to provide investors with familiar products that enable access to tokens at the cutting edge of the crypto ecosystem’s continued evolution.

These newly launched Trusts are now available for daily subscription by eligible individual and institutional accredited investors, operating similarly to Grayscale’s existing suite of single-asset investment trusts. 

Notably, they represent some of the first investment products exclusively focused on the tokens underpinning the Bittensor Protocol and Sui.

In Wednesday’s announcement, Grayscale also confirmed its intention to seek a secondary market listing for the new products. Still, it cautioned that success was not guaranteed, with regulatory considerations posing potential challenges.

SUI & TAO Price Analysis

Following the asset manager’s announcement, the two tokens present a stark contrast in price action following the broader market crash experienced over the weekend and exacerbated on Monday. 

For instance, the SUI token hit a 9-month low of $0.4636 on August 5th, following a steady decline from its all-time high of $2.17 in March of this year. However, SUI has climbed back to the $0.6166 level since Monday, with a 3% increase in the last 24 hours, with its next resistance wall at $0.6966.

Grayscale

On the other hand, the TAO token has been unable to post gains in recent weeks, registering a 24% price drop in the fourteen-day time frame. Despite this, TAO has rallied significantly to the $253 level on Wednesday after falling to the $164 level on Monday. 

In the case of another leg up to regain previously lost levels, the most insignificant hurdle in the near term is placed at the $300 level, which is key for bullish investors in the token to approach the all-time high of $757 reached in March. 

Featured image from DALL-E, chart from TradingView.com

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Ethereum ETFs Debut: BlackRock Reigns With $260M Inflows, Grayscale Bleeds

Nine spot Ethereum ETFs commenced trading on the US stock market on Tuesday, marking a pivotal moment for the crypto industry following the Securities and Exchange Commission’s (SEC) green light on Monday.

Ethereum ETFs See $1B In Trading Volume On Debut

James Seyffart, a senior ETF analyst at Bloomberg, described the Monday ETF launch as a “pretty big success,” according to a Fortune report. However, the initial enthusiasm was tempered by a stark comparison to Bitcoin’s ETF debut earlier this year, which garnered $655 million in inflows on its first trading day.

Ethereum ETFs

Diving into the specifics, the Ethereum ETFs collectively amassed $10.2 billion in assets, with trading volumes surpassing $1.1 billion on day one. Grayscale’s Ethereum Trust (ETHE) led the volume race with $469.7 million. 

Among the key players, BlackRock led the charge with $266 million in inflows, followed closely by Bitwise with $204 million and Fidelity with $71 million. 

Despite these figures, the ETFs collectively witnessed net inflows of $107 million, overshadowed by Grayscale’s Ethereum Trust’s outflows of $484 million, as per Bloomberg data.

However, the market response to the ETFs did not translate into a noticeable impact on Ethereum’s price, which experienced a marginal 0.8% decline since trading commenced. 

Currently, the second largest cryptocurrency on the market is trading at $3,420, with a 27% decrease in trading volume in this area, amounting to $16 billion in the last 24 hours, and no significant changes to Tuesday’s price value per coin. 

Bright Future Despite Challenges

Given that Ethereum’s market cap is a fraction of Bitcoin’s, the comparatively smaller inflows were somewhat to be expected. In addition, the Fortune report noted that the lack of a staking feature in the ETFs, which is prohibited by the SEC, also drove some investors to buy Ethereum directly, bypassing the new Ethereum ETFs mechanism.

Another strong reason for the outflows on the first day of the ETHE fund is Grayscale’s 2.5% fee compared to competitors charging 0.25% or less, a factor that is believed to have influenced investor behavior and contributed to ETHE’s outflows.

Despite the lack of market response, Seyffart remains optimistic about the reception of the Ethereum ETFs, citing the strong performance of “smaller players” such as 21 Shares’ Core Ethereum ETF, which attracted $8.7 million in inflows. Seyffart said to Fortune:

Very successful launch day by any standard ETF’s first day of trading. On top of this, the volume numbers were very strong. 

Ethereum ETFs

Adding to the optimistic outlook for the Ethereum ETFs, it is noteworthy that Bitcoin (BTC) surged to an all-time high of $73,700 on March 14, just two months after the approved ETFs started trading. 

Although ETFs investing in ETH’s price may not attract as much inflow and trading volume as BTC, this could lead to a sustained increase in ETH’s price in the long term. 

Featured image from DALL-E, chart from TradingView.com

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Grayscale Battling Outflows And Lower-Cost ETFs, Q1 Revenue Stays Flat At $156M

Grayscale Investments, the issuer of one of the recently approved spot Bitcoin exchange-traded funds (ETFs) in the US, saw flat revenues in the first quarter of the year due to its decision to maintain fees on its flagship Grayscale Bitcoin Trust ETF (GBTC). 

Grayscale Exceeds Expectations Despite Outflows

According to a shareholder letter from its parent company, Digital Currency Group (DCG), the operator of the Grayscale Bitcoin Trust recorded $156 million in revenue, showing little change from the previous quarter.

Since the GBTC trust’s conversion to an ETF in January, Grayscale has seen outflows of about $17.4 billion as investors appear to have shifted their assets to new, lower-cost funds offered by BlackRock and Fidelity, the leaders in the US ETF race in terms of inflows recorded since January. 

While GBTC charges a 1.5% management fee, many of its competitors charge less than 0.3%, leading to outflows. In response, Grayscale announced plans in March to seek approval from the Securities and Exchange Commission (SEC) to spin off some of Grayscale’s assets into a new, lower-fee “Bitcoin Mini Trust.” 

Despite the outflows, the Q1 revenue attributable to GBTC exceeded Grayscale’s expectations. The firm had previously anticipated outflows due to increased competition under the ETF wrapper. Grayscale previously charged a 2% sponsorship fee before the trust was converted. 

The flat revenue was also attributed to higher average Bitcoin and Ethereum prices and a decrease in assets under management (AUM).

In contrast to Grayscale’s performance, all US spot Bitcoin ETFs have witnessed a total net inflow of over $11 billion thus far. However, demand for these ETFs has recently declined amidst tightening financial conditions in the US, where the Federal Reserve (Fed) faces the challenge of addressing persistent inflation.

DCG Reports 11% Q1 Revenue Increase

Digital Currency Group, founded by Barry Silbert and the parent company of Grayscale, reported an 11% quarter-over-quarter increase in Q1 revenue to $229 million, primarily due to higher asset prices. 

However, revenue growth lagged behind Bitcoin’s price appreciation, which rose more than 60% during the same period. In its letter, DCG attributed this disparity to lower GBTC sponsor fees, redemptions, and steady mining revenues at its Foundry subsidiary.

Foundry, DCG’s mining subsidiary, experienced a sequential revenue increase of 35%, propelled by staking and equipment sales revenue. Meanwhile, Luno, the company’s crypto exchange subsidiary, witnessed a 46% quarter-over-quarter sales boost, driven by a significant surge in trading volume.

Grayscale

At press time, Bitcoin is trading at $62,100 and has recently encountered significant price volatility. These price swings have failed to establish a stable position above crucial price thresholds.

Featured image from Shutterstock, chart from TradingView.com 

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US Spot Bitcoin ETFs Experience Record Outflows, Losing $740 Million In Three Days

The 10 spot Bitcoin ETFs experienced their biggest three-day outflow since their debut in January, as reported by Bloomberg. This shift in investor sentiment comes after heightened interest that propelled the largest cryptocurrency in the market to a record high of $73,700.

Bitcoin ETFs See Record Outflows

Between Monday and Wednesday, a net total of $742 million exited the Bitcoin ETFs, reflecting outflows from the Grayscale Bitcoin Trust (GBTC) and a moderation in subscriptions for similar offerings from prominent firms like BlackRock (IBIT) and Fidelity Investments (FBTC).

According to Bloomberg ETF expert Eric Balchunas, the Grayscale Bitcoin Trust has experienced a notable outflow surge. This recent development indicates a “second wind” of investor withdrawals, with a substantial $1.4 billion leaving the trust just this week. 

Bitcoin ETFs

Notably, these withdrawals have surpassed all other ETFs in year-to-date outflows and set a new record for cumulative outflows in ETF history, as shown in the chart above.

Nevertheless, GBTC continues to hold a prominent position in terms of revenue generation. It currently ranks third out of the 3,400 ETFs available, demonstrating its continued financial success.

Despite the recent outflows, the overall performance of these funds remains noteworthy, with net inflows of $11.4 billion recorded since their launch, according to data compiled by Bloomberg. This signifies one of the most successful debuts for an ETF category.

Crypto Analyst Predicts “Massive Bounce” For BTC

Bitcoin experienced a significant surge of over 5% in the United States on Wednesday, propelled by signals from the Federal Reserve (Fed) hinting at potential interest-rate cuts. 

However, the Asian market painted a different picture on Thursday, with Bitcoin losing momentum compared to continued gains in global stocks and gold. According to Bloomberg, the news of outflows from Bitcoin ETFs permeated markets, contributing to the contrasting performance.

Nonetheless, renowned crypto analyst Michael van de Poppe shared a bold prediction on social media platform X (formerly Twitter). In his post, he expressed optimism about a “massive bounce” for Bitcoin, suggesting the potential for a continuation of its upward trajectory. 

Van de Poppe also predicted that Bitcoin could consolidate in the near term before embarking on another rally towards the all-time high it reached before the halving event, which is expected to begin sometime in April.

Bitcoin ETFs

Currently, BTC is trading at $66,200, reflecting a 4% increase in the past 24 hours despite ongoing outflows in the ETF market. Over longer time frames, Bitcoin has shown consistent gains, with a 27% increase over the past thirty days and an impressive 136% gain year-to-date.

Featured image from Shutterstock, chart from TradingView.com 

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Record-Breaking GBTC Outflows Send Bitcoin Down 14% To $62,000

As reported by Fortune Magazine, the cryptocurrency market has been experiencing significant volatility as Bitcoin (BTC) has experienced a sharp decline that has had a domino impact on other cryptocurrencies. The recent drop in the price of Bitcoin, coupled with outflows from Grayscale’s GBTC, has raised concerns among investors. 

Bitcoin Sees 14% Correction From ATH

Bitcoin suffered a 14% drop since reaching its all-time high (ATH) of $73,700 last week, briefly touching $62,483 on Tuesday morning. However, it recovered and stabilized around $64,900, just below the $65,000 mark. 

The decline was attributed to record outflows of over $640 million from Grayscale’s Bitcoin Trust (GBTC). In comparison, other spot Bitcoin ETFs saw inflows of less than $500 million, resulting in a net outflow of $15 million on Monday, according to Bloomberg ETF expert James Seyffart. 

Bitcoin

This outflow from GBTC, combined with the cautious sentiment surrounding the Federal Open Market Committee (FOMC) meeting in the US, has had a significant impact on Bitcoin’s performance.

As recently reported by NewsBTC, investors exhibited caution ahead of the FOMC meeting, closely monitoring the potential changes in interest rates. Recent higher-than-expected inflation data, as indicated by the US Consumer Price Index (CPI) and Producer Price Index (PPI), dampened expectations of interest rate cuts. 

According to Fortune, the CME FedWatch Tool projected a 99% likelihood of rates remaining unchanged, further affecting market sentiment. Per the report, investors were keen to gauge the Federal Reserve’s stance on monetary policy, contributing to the cautious trading environment.

In the same context, the Bank of Japan raised its key interest rate from -0.1% to 0% to 0.1% in response to rising consumer prices. This was the first rate increase in 17 years.

Crypto Futures Traders Take A Hit

The drop in Bitcoin’s price had a cascading effect on other cryptocurrencies. Major altcoins like Ethereum (ETH) and Solana (SOL) experienced significant declines of 8.1% and 12.5% over the past 24 hours, respectively. 

Meme coins, including Floki Inu (FLOKI), Bonk Inu (Bonk), and Dogecoin (DOGE), also suffered losses of 34%, 28.5%, and 24.8%, respectively, during the past week. 

The decline in cryptocurrency prices resulted in over $440 million worth of liquidations for traders of crypto futures. Traders who had leveraged positions betting on higher prices faced significant losses. Most of these liquidations occurred on Binance, totaling $212 million, followed by OKX at $170 million. 

Bitcoin

Despite its price correction, BTC retains substantial gains of over 26% and 132% in the past thirty days and year-to-date timeframe, respectively.

Featured image from Shutterstock, chart from TradingView.com

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$130M Silk Road Bitcoin Stash To Be Sold By US Government

Since mid-January Bitcoin (BTC) has been facing mounting selling pressure from various market players. This includes asset manager Grayscale, bankrupt crypto exchange FTX, and now, the US government, which is set to auction off a substantial amount of Bitcoin seized from the infamous dark web marketplace Silk Road.

Sale Of Confiscated Silk Road Bitcoin

The US government has filed a notice to sell approximately $130 million worth of Bitcoin confiscated from Silk Road. The filing states that the United States intends to dispose of the forfeited property as directed by the United States Attorney General.

Individuals or entities, except for the defendants in the case, claiming an interest in the forfeited property must file an ancillary petition within 60 days of the initial publication of the notice. 

Once all ancillary petitions have been addressed or the filing period has expired, the United States will obtain clear title to the property, enabling them to warrant good title to subsequent purchasers or transferees.

The ongoing selling pressure on BTC has resulted in a sharp 20% correction over the past 10 days. This trend is expected to continue and further amplify the selling pressure. Adding to the situation, asset manager Grayscale, while slowing down its selling activities, continues to transfer a significant amount of Bitcoin to Coinbase. 

Bitcoin

According to data from Arkham Intelligence, Grayscale recently sent an additional 10,000 BTC worth $400 million to Coinbase. 

Since the approval of the Bitcoin spot exchange-traded fund (ETF), Grayscale has deposited a total of 103,134 BTC ($4.23 billion) to Coinbase Prime. Currently, Grayscale holds 510,682 BTC ($20.43 billion).

Ideal Buying Opportunities? 

Adam Cochran, a prominent market expert, has provided insights into the recent price action and the expectations of Bitcoin buyers. Cochran highlights that aggregate open interest (OI) for BTC has decreased by 17% from recent highs but remains around 20% higher than the averages observed during more stable market ranges. 

Cochran notes that the market has seen attempts to catch falling prices, suggesting a mix of “sophisticated” and leveraged buyers.

Cochran further observes that retail investors are driven by narratives surrounding the ETF and halving events, leading them to buy dips on leverage. However, many investors remain unconvinced about the market’s direction and are waiting for a clear entry point, according to Cochran’s analysis. 

Notably, Cochran highlights that the current funding rates do not indicate a bearish sentiment, even in options trading, suggesting an expectation of a bottom formation shortly.

The market’s dynamics are influenced by emotions and probabilities, and Cochran believes that too many participants are overexposing themselves emotionally by trying to catch the bottom of the market on each dip. 

This behavior has increased the likelihood that the recent price action may not mark the bottom yet. Cochran suggests that a sentiment reset, a decline in the 3-month annualized basis by around 25%, and a further decrease in open interest would provide a healthier environment for major plays in the market.

Ultimately, Cochran emphasizes the need for a reset in expectations, highlighting that a period of doom and despair is necessary for market participants to reassess their positions. 

Cochran points out that a range between $35,000 and $37,000 BTC could be a suitable level for larger spot buys in the longer term. However, Cochran also notes that a potential drop to the $28,000 to $32,000 range could provide ideal conditions for confident, leveraged deployment.

Bitcoin

Currently, BTC is trading at $39,800, up a slight 0.6% in the past 24 hours, but down over 14% in the past fourteen days.

Featured image from Shutterstock, chart from TradingView.com

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Bitcoin ETF Day 8 Update: Market Rebound Signals Bottom As Grayscale Selling Slows Down

Since the approval of Bitcoin ETF applications by the US Securities and Exchange Commission (SEC) on January 11, followed by the commencement of trading a day later, the ETF race has witnessed impressive trading volumes on each trading day.

As the market recovers from a sharp correction, recent developments indicate a notable slowdown in Grayscale selling, which could potentially signal a rebound for the Bitcoin price following the recent 20% drop.

Market expert James Mullarney and Bloomberg ETF expert Erich Balchunas provide key insights into Bitcoin ETF fund flows after 8 days, shedding light on the evolving dynamics and investor sentiments surrounding this development.

Hope For Bitcoin Bulls 

One of the key observations made by James Mullarney is the deceleration in Grayscale’s selling activities. While Grayscale continues to sell, the pace of their selling has significantly reduced, indicating a potential shift in their strategy. 

This is seen as a positive sign for the market, as a slowdown in Grayscale selling could contribute to stabilizing Bitcoin prices and restoring investor confidence.

Bitcoin ETF

Amidst this backdrop, major players in the asset management industry, such as BlackRock and Fidelity, have showcased their resilience and commitment to Bitcoin. 

BlackRock, one of the world’s largest asset managers, currently holds 44,000 BTC in assets under management (AUM), indicating their growing exposure to the cryptocurrency. 

Similarly, Bitcoin ETF issuer Fidelity, renowned for its digital asset services, stands strong with 40,000 BTC AUM, demonstrating their continued confidence in Bitcoin and its long-term potential.

Moreover, the dynamics of the recent sell-off are noteworthy. The majority of the selling pressure observed in the market involved FTX, which completed day 8 of trading. 

However, as the market enters day 9, the expectation is for a significant reduction in selling pressure from FTX and Grayscale, potentially contributing to a more stable market environment, according to Mullarney. 

The emergence of Bitcoin ETFs as significant holders of the cryptocurrency is another positive aspect to consider. ETFs have not only absorbed the 101,600 BTC sold by Grayscale but have also increased their holdings by an additional 21,100 BTC in just 8 days. 

According to  Mullarney, this indicates growing institutional interest in Bitcoin, as ETFs continue to accumulate significant amounts of the cryptocurrency.

Bitcoin ETF Issuers Counter Grayscale Selling

Despite Grasycale’s selling spree, Mullarney highlights that the Bitcoin ETF managers alone are acquiring 15 times the daily Bitcoin supply, surpassing 13,444 BTC against the 900 BTC daily creation rate. 

This notable inflow of BTC demonstrates the strong demand from institutional investors and highlights the potential impact of ETFs on the overall Bitcoin market. 

Interestingly, the new ETFs have absorbed a net total of 122,000 BTC in just 8 days, overcoming the impact of Grayscale’s release and contributing to a positive net inflow.

Bloomberg ETF expert Erich Balchunas adds further insights to the analysis. Balchunas notes that the volume of Grayscale Bitcoin Trust (GBTC) has decreased, which could be a sign of exhaustion in selling. 

However, $515 million was withdrawn from GBTC yesterday, resulting in a total outflow of $3.96 billion since its conversion to an ETF. On a more positive note, there was a net inflow of $409 million on the ninth day, indicating renewed investor interest.

Bitcoin ETF

Featured image from Shutterstock, chart from TradingView.com

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Bitcoin Price At Risk? Grayscale’s $335M Coinbase Transfer Stirs $30,000 Plunge Potential

The Bitcoin price has experienced a notable shift as selling pressure mounts, with BTC bears gaining the upper hand. Asset manager Grayscale, the owner and manager of the Grayscale Bitcoin Trust (GBTC), is a significant contributor to this trend. 

Since the trading of spot Bitcoin exchange-traded funds (ETFs) began on January 12, Grayscale has been on a selling spree, as evidenced by substantial transfers of BTC to the United States-based crypto exchange Coinbase.

Bitcoin Price Under Pressure As Grayscale Selling Spree Continues

According to Akrham Intelligence data, in addition to the previously reported 69,994 BTC ($2.9 billion) transfers, Grayscale sent an additional 8,593,075 BTC (approximately $335.19 million) to the exchange on Tuesday, suggesting the possibility of further selling activities.

Bitcoin price

These developments have affected the Bitcoin price, which has experienced a significant downtrend, declining by 20% over the past week and a half. 

On Tuesday, the largest cryptocurrency dropped as low as $38,500, placing considerable pressure on a crucial support level. Despite the bearish pressure, the $38,500 support level has demonstrated resilience so far, with the cryptocurrency rebounding to $39,300 at the time of writing. 

Nevertheless, the duration of Grayscale’s selling spree remains uncertain, and if market sentiment continues to turn negative, Bitcoin could potentially revisit the $30,000 mark. This figure is just above the key $29,000 level that marked the beginning of the bull run that took Bitcoin to its 22-month high of $49,000 on January 11th.

Bears On The Rise

If the $38,500 threshold succumbs to Grayscale’s selling pressure and profit-taking, market observers should closely monitor the $37,750 level as the next resistance. 

Failure to hold above this level would open the door to a potential decline toward the major resistance at $35,600, which could further prevent a dip to the next support level at $33,000.

However, if these support levels are breached and the Bitcoin price continues its downtrend, the next significant key levels to watch for bullish momentum would be $29,000 to $30,000. A breakdown below these levels could signal an end to the current bull market structure and grant the bears the upper hand in the mid-term, at least until the anticipated halving event in April. 

Historically, halving events have acted as major catalysts for the Bitcoin price, and their influence has been demonstrated.

As the Bitcoin market faces intensified selling pressure and Grayscale’s ongoing selling spree, market participants remain cautious about the potential for a significant price plunge. The coming days and weeks will be critical in determining whether Bitcoin can regain its bullish momentum or if it will succumb to further downward pressure.

Bitcoin price

Featured image from Shutterstock, chart from TradingView.com

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Grayscale Transfers Almost 12,000 BTC To Coinbase, Bitcoin Price Reacts

In a significant development that could potentially impact the Bitcoin price, Arkham Intelligence data reveals that Grayscale, the manager and owner of the Grayscale Bitcoin Trust (GBTC), has been sending a significant amount of Bitcoin to Coinbase since the launch of Bitcoin spot exchange-traded funds (ETFs) on January 12.

Grayscale Bitcoin Trust Initiates Substantial BTC Outflow

According to the data, four days ago, Grayscale initiated the first batch of BTC outflows from their holdings to the US-based exchange in four separate batches, totaling 4,000 BTC, which amounted to approximately $183 million. However, the asset manager resumed outflows from the Trust to the exchange on Tuesday.

Bitcoin price

In a recent update, approximately three hours ago, the asset manager sent an additional 11,700 BTC to Coinbase, amounting to $491.4 million. This additional selling pressure could push the Bitcoin price to test lower support levels.

Furthermore, Bloomberg reports that investors have withdrawn over half a billion dollars from the Grayscale Bitcoin Trust during the initial days of trading as an ETF. 

According to Bloomberg’s data, outflows from the Grayscale Bitcoin Trust reached approximately $579 million, while the other nine spot Bitcoin ETFs witnessed inflows totaling nearly $819 million.

Investors Shift Capital To ‘Lower-Cost’ Spot Bitcoin ETFs

James Seyffart, an ETF analyst at Bloomberg Intelligence, noted that investors may be profit-taking following the ETF conversion. The flow data provides valuable insights into the ETF’s performance following SEC approval. 

Although over $2.3 billion of GBTC shares were traded on its first day, the outflows indicate that a portion of that volume was due to selling. Seyffart anticipates that a significant amount of capital will enter other Bitcoin exposures.

The outflows from Grayscale’s ETF were somewhat expected. Bloomberg Intelligence had previously projected that the fund would experience outflows of over $1 billion in the coming weeks. 

Some of this outflow can be attributed to investors shifting towards more cost-effective spot Bitcoin ETFs. With an expense ratio of 1.5%, GBTC is the most expensive US ETF directly investing in Bitcoin. In contrast, the VanEck Bitcoin Trust, the second-most expensive fund, charges 0.25%.

On the other hand, other spot Bitcoin ETFs have witnessed net inflows. BlackRock’s IBIT attracted nearly $500 million in the first two days of trading, while Fidelity’s FBTC received approximately $421 million. 

According to Bloomberg, these inflows suggest strong demand for Bitcoin exposure in physically backed ETFs, even beyond potential seed funding from the fund issuers.

Bitcoin Price Finds Support At $42,000

Currently, the Bitcoin price remains unaffected by the news of Grayscale’s transfers to Coinbase. The leading cryptocurrency is trading at $43,100, showing a slight increase of 0.8% over the past 24 hours.

However, since the commencement of ETF trading, it is important to note that the Bitcoin price has experienced a significant retracement, declining by 8%. This decline can be attributed to profit-taking and selling pressure, with Grayscale’s involvement being noteworthy.

In the event of a further drop in the Bitcoin price, a significant support level has been established at $42,000. If this level is breached, the next key level for Bitcoin bulls to watch is $41,350, followed by a potential dip below $40,000.

The market is eagerly observing whether Grayscale and its BTC selloff will continue and how this will impact the Bitcoin price leading up to the scheduled halving event in April, which many consider to be the main catalyst for the year.

Bitcoin price

Featured image from Shutterstock, chart from TradingView.com 

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Cathie Wood’s ARK ETF Overhauls Bitcoin Portfolio: ProShares In, Grayscale Out – What’s The Strategy?

In a significant shake-up of its Bitcoin (BTC)-related holdings, Cathie Wood’s ARK Next Generation Internet exchange-traded fund (ETF) has made strategic changes as BTC ends the year with a significant 156% surge.

According to a Bloomberg report, the ETF sold all its remaining 2.25 million shares of the Grayscale Bitcoin Trust (GBTC) while acquiring 4.32 million shares of the ProShares Bitcoin Strategy ETF. 

Caution As Reason For Exiting Grayscale Bitcoin Trust

According to Bloomberg, Wood cited caution as the reason behind the sale of the Grayscale Bitcoin Trust. The move was prompted by concerns that the anticipated conversion of the trust to a spot Bitcoin ETF might not receive approval from US regulators in early January. 

Additionally, Wood highlighted the substantial reduction in the trust’s discount to its net asset value, which, combined with its price increase, influenced the decision.

Wood emphasized the unpredictability surrounding which Bitcoin-related offerings would gain regulatory approval, expressing optimism about Bitcoin while acknowledging the uncertainty ahead.

In this regard, Bloomberg ETF expert Erich Balchunas highlights that approximately $100 million of the proceeds were used to purchase the ProShares Bitcoin Strategy ETF (BITO), likely as a liquid transition vehicle to maintain exposure to Bitcoin while gradually transitioning into either ARKW or ARKB.

Bitcoin

Interestingly, ARK has now become the second-largest holder of BITO, although Balchunas clarifies that this is a temporary parking spot. Blachunas emphasizes that institutions, including ARK, often employ highly liquid ETFs for transitions of this nature. 

Balchunas also points out that this move aligns with the prediction made by Bloomberg a month ago, reflecting strategic foresight on ARK’s part. 

According to Balchunas, this decision is smart as it allows ARK to boost its own ETF’s assets under management (AUM) while saving investors from incurring a significant expense ratio in the process.

Wood’s Long-Term Vision

Per the report, the reduction in holdings of the Grayscale Bitcoin Trust has been a gradual process for Cathie Wood, even as the price of Bitcoin surged to its highest level since April 2022. 

Throughout 2023, Bitcoin more than doubled in value, with significant gains occurring towards the end of the year amid speculation that the Securities and Exchange Commission (SEC) would approve spot Bitcoin ETFs in the first days of January 2024.

During the Sohn Australia conference last month, Wood touted the Grayscale Bitcoin Trust as her top pick. However, recent developments have led to a shift in the ETF’s portfolio composition.

In addition to the changes involving Grayscale and ProShares, the ARK ETF also purchased 20,000 shares of the ARK 21Shares Active Bitcoin Futures Strategy ETF and sold 148,885 shares of the cryptocurrency exchange Coinbase Global, according to the fund’s report.

The ARK Next Generation Internet ETF has achieved an impressive 103% gain for the year, surpassing the 55% advance of the Nasdaq 100 Index. 

It is worth noting that the fund’s performance has been characterized by significant volatility, experiencing declines of 19% and 67% in 2021 and 2022, respectively.

Bitcoin

The leading cryptocurrency in the market is trading at $42,800, exhibiting a sideways price movement over the past 24 hours. During this timeframe, there has been a marginal decrease of 0.3% in its value.

Featured image from Shutterstock, chart from TradingView.com 

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Grayscale Files Updated Spot ETF As Bitcoin Barrels Past $37,000

The asset manager Grayscale has filed an updated Spot Bitcoin ETF filing following its meeting with the Securities and Exchange Commission (SEC). The foremost cryptocurrency, Bitcoin, also rebounded on the back of the news as it crossed the $37,000 mark once again.

Why Grayscale’s Filing May Be Significant

In its filing dated November 22, Grayscale made some amendments to the original S-3, which it had previously filed with the SEC. As pointed out by prominent finance lawyer Scott Johnsson, the changes include some new risk factors. Some of these risk factors are said to match that of ARK Invest’s relating to expanded disclosure of fraud and manipulation risk. 

Johnsson noted that the amended risk factors are important because their inclusion is most likely a directive from the SEC. Meanwhile, fraud and manipulation had served as the grounds why the SEC had disapproved Grayscale’s initial application. Therefore, the lawyer believes that the SEC directing Grayscale to include could mean a “concession” that it is no longer a “roadblock.”

As highlighted by Johnsson, Grayscale’s revised filing is significant, especially considering the fact that it has met with the SEC division responsible for approvals right before it. As such, one could assume that it has gotten direction on how to ensure compliance in the hopes that approval could come soon. 

Meanwhile, it would seem that other potential issuers are also in talks with the SEC. Bloomberg Analyst James Seyffart had recently mentioned hearing rumors of such. If true, that could mean that the SEC is more open to approving these ETFs.

Spot Bitcoin ETFs Providing Momentum To Crypto Market

Bitcoin rallied past $37,000 on the back of Grayscale’s filing. This price movement signifies the impact that the Spot Bitcoin ETF narrative has on the market. This is also not the first time that news around Spot Bitcoin ETF has provided momentum to the market. 

In October, Bitcoin touched $30,000 for the first time in months on the back of a false CoinTelegraph post. Although it was false, many instantly realized the impact that an approval of these funds could have on the market. Meanwhile, shortly after that, Bitcoin and the whole crypto market continued to rally on the back of the narrative. 

During that period, Bitcoin crossed $35,000 on the back of news that BlackRock iShares Bitcoin Trust had been listed on the Depository Trust & Clearing Corporation. BlackRock had also revealed plans to begin seeding during that period. While everyone in the market continues to hold on to speculation, many will hope that the projection of approval by January 10, 2024, comes true. 

At the time of writing, Bitcoin is trading at around $37,300, up over 2% in the last 24 hours according to data from CoinMarketCap.

Bitcoin price chart from Tradingview.com (Grayscale Spot ETF)

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Grayscale Takes New Approach As It Files For Another Ethereum Futures ETF

On the back of its partial victory against the US Securities and Exchange Commission (SEC), Grayscale has applied to the Commission for another Ethereum Futures Exchange-Traded Fund (ETF).

Why Another ETH Futures ETF?

According to a report by the Wall Street Journal (WSJ), Grayscale Investments filed this application on September 20. This development may come as a surprise to many, considering that the asset manager had filed an earlier application to offer this same investment vehicle. As such, this will represent its third application (Grayscale withdrew its first application due to SEC concerns before filing another one in July).

There is, however, a distinction between both applications, as WSJ noted. The latest application is filed under the Securities Act of 1933, a regulation under which spot Bitcoin ETFs like BlackRock’s filed. Meanwhile, the initial application was filed under the Investment Company Act of 1940, a regulation which securities-based ETFs are registered under. 

While the exact reason for Grayscale’s action remains unknown, it may be a contingency plan in case the SEC denies its initial proposed Ethereum futures ETF, which is expected to launch in October, barring any denial.

Grayscale’s filing under the Securities Act of 1933 isn’t the first, as Brazilian investment firm Hashdex filed its Ethereum ETF application under that Act. Last week, Hashdex applied with the SEC to offer a fund that will hold both Ether futures contracts and a Spot Ethereum ETF (the first of its kind).

The firm justified this move by stating that a combination of both markets will help mitigate the risk of market manipulation.

Hashdex’s application has been singled out for how distinct it is from other applications. The investment firm has proposed to use the Chicago Mercantile Exchange (CME) to track the price of Ethereum and also plans to buy the Ether, which the fund will hold from the CME Market’s Exchange for Physical (EFP) transactions. 

Ethereum price chart from Tradingview.com (Ethereum Futures ETF Grayscale)

Ethereum Futures ETF Imminent?

Several Ethereum futures ETFs are expected to hit the market in October, barring a denial by the SEC. Rule 485(a) of the SEC Rules allows these ETFs to launch 75 days from their respective filing dates if the SEC doesn’t deny them before then. 

In line with this, the ETFs of fund managers like Volatility Shares, Bitwise, VanEck, ProShares, and Roundhill will be the first to launch if they receive approval from the SEC.

Volatility Shares was the first among them to apply to offer Ethereum futures ETF. As such, it will gain the first-mover advantage, carrying a possible October 12 launch date, with others coming after. However, this is subject to any decision by the SEC.

The SEC approving an Ethereum ETF will be a historical event that is expected to give the crypto market a much-needed boost as the bear market continues to linger. There are already forecasts that ETH’s price could rise above $2,000 when these funds launch. 

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Grayscale CEO Highlights US Opportunity To Lead Crypto Space Through Regulation

The chief executive of Grayscale, a leading digital asset management firm, believes that the United States has a significant opportunity to dominate the cryptocurrency space by shaping effective regulations. 

In a recent interview with Yahoo Finance, Grayscale CEO Michael Sonnenshein expressed optimism about the progress made in the past year and highlighted the bipartisan support for crypto-related legislation. 

Sonnenshein emphasized the importance of lawmakers’ understanding of the crypto industry and urged Congress to actively engage with the issue to foster innovation and create robust financial and regulatory frameworks.

Grayscale CEO Urges Congress To Support Crypto

Sonnenshein commended the “groundbreaking” work done by regulators and lawmakers in Washington over the past 12 months, acknowledging the efforts of Chairman McHenry, Congressman Hill, and Senators Lummis and Gillibrand. 

The Grayscale CEO emphasized that crypto has become a nonpartisan issue, with members of Congress increasingly recognizing its long-term presence and importance.

Sonnenshein praised the bills that have made progress and are set for further votes in the fall, highlighting the need for broader member support and ongoing engagement on crypto-related topics.

Moreover, Sonnenshein underscored the growing involvement of constituents who are part of the crypto space and stressed the importance of elected officials aligning their positions accordingly. 

With upcoming elections and various catalysts on the horizon, Sonnenshein urged members of Congress to actively engage with the crypto industry, given its increasing significance and the need for comprehensive financial and regulatory frameworks, expressing optimism about the current momentum surrounding crypto legislation and the unprecedented level of engagement from lawmakers.

Grayscale’s GBTC Inches Closer To ETF Conversion?

Regarding the recent court order that vacated the SEC’s denial order for the Grayscale Bitcoin Trust (GBTC) application to convert to an Exchange-Traded Fund (ETF), Sonnenshein addressed the ongoing process and emphasized the organization’s commitment to full and fair disclosures. 

Grayscale has been litigating to convert GBTC into an Bitcoin (BTC) Spot ETF, as it would provide investors with additional protections, disclosures, and reporting obligations. 

On this matter, Sonnenshein stated that constructive dialogue with the SEC is anticipated once the 45-day process is complete, and the organization looks forward to pursuing the next steps expediently.

Furthermore, Sonnenshein highlighted the significant recognition given to the crypto industry by global entities such as the G20 and the International Monetary Fund (IMF), emphasizing the opportunity for the United States to establish itself as the center of the global capital markets ecosystem by implementing the right frameworks. 

Notably, Sonnenshein advocated for maintaining an open-door policy for innovation and positioning the US as a leader in the crypto space.

Overall, Grayscale CEO Michael Sonnenshein’s interview emphasized the United States’ chance to dominate the crypto space through effective regulation. With bipartisan support and increasing awareness among lawmakers, Sonnenshein urged Congress to engage actively and build momentum around crypto-related legislation. 

Grayscale

Featured image from iStock, chart from TradingView.com

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Grayscale Victory Sends Bitcoin Open Interest Surging After Hitting One-Year Lows

Over the last couple of weeks, the Bitcoin open interest had been on a downtrend that sent it toward one-year lows. However, with the Grayscale victory against the SEC coming on Tuesday, August 29, and sending a positive wave across the entire region, open interest in the digital asset has begun to surge once more.

Bitcoin Open Interest Pulls A Quick Reversal

On-chain data tracking platform Kaiko reported on Tuesday, August 29, that the Bitcoin open interest had been on the decline for a while. In the chart shared by the tracker, it is obvious that this BTC metric had previously fallen significantly since 2022.

As August drew to a close, the open interest in the digital asset eventually declined to levels not seen since the Terra network collapse back in May 2022. This suggested that it could be a good chance to get into Bitcoin and it would be proven true not too long after.

On the same day, news broke that Grayscale had triumphed over the United States Securities and Exchange Commission (SEC) in court over its bid for its Spot Bitcoin ETF filing to be reconsidered. This triggered a rapid uptrend in the price of the digital asset and the open interest followed suit.

According to data from Coinglass, the Bitcoin open interest is seeing double-digit growth on some exchanges already. The open interest on the dYdX exchange is up over 35%, and the cumulative open interest across all exchanges is now in the green, rising 9.55% in the last 24 hours.

Bitcoin open interest recovers

Does This Mean BTC Will Continue The Uptrend?

For now, the price of Bitcoin is still purely driven by the hype from the Grayscale victory. This means that there is no telling how long the uptrend will last and when it will start correcting downward. However, as long as investors remain optimistic about the victory, BTC will continue to enjoy green days.

As for open interest, a recovery isn’t always a good thing as it opens up an avenue for shorters to enter the market. For example, a look at Keiko’s chart shows open interest was high leading up to the FTX collapse in 2022. Then in early 2023 when the price of Bitcoin was rallying, open interest fell before picking up steam once more.

For now, BTC is still enjoying the spike in attention. The price of the cryptocurrency is up 5.35% in the last 24 hours to trade at $27,349.

Bitcoin price chart from Tradingview.com (open interest)

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GBTC Shares See Volumes Climb To 2-Year High Amid Grayscale’s Victory Lap

On August 29, the US Court of Appeals ruled in favor of Grayscale in its legal battle against the US Securities and Exchange Commission (SEC). Following this, Grayscale’s GBTC shares trading volume significantly increased, climbing to a 2-year high in the process.

GBTC Shares See 17% Increase

According to data from Yahoo Finance, GBTC’s share price had opened at $17.66 on the day and closed at $20.56, rising by almost 17% from the previous day. Furthermore, the fund saw its busiest day in over a year, with over 19 million GBTC shares changing hands. This volume jump marked the fund’s highest in over two years.

These figures aren’t surprising, considering that Grayscale’s victory presents a bullish outlook for the fund. Furthermore, Grayscale’s GBTC is one step closer to being converted into a Spot Bitcoin ETF, so many investors may want to get in on the fund at a discounted price.

GBTC currently operates as a closed-end fund and has seen a discount as high as 48.89% of its net asset value (NAV) in December 2022. This discount has been reduced to about 18% following the court’s ruling in favor of Grayscale. However, some still believe this gap could close further, especially if Grayscale’s ETF application were approved.

Grayscale Bitcoin Trust (GBTC) share price chart from Tradingview.com

Big Win For The Crypto Community

Grayscale had filed a lawsuit following the SEC’s refusal to grant its application to convert its GBTC fund into a Spot Bitcoin ETF. 

Grayscale argued that the SEC acted arbitrarily and capriciously by not giving it the same regulatory treatment the Commission did to the Teucrium Bitcoin Futures Fund and the Valkyrie XBTO Bitcoin Futures Fund.

The fund stated that it deserved the same treatment as the Bitcoin futures fund because the prices of both Spot and Futures Bitcoin ETFs were “99.9%” correlated, so they posed the same risk regarding fraud and manipulation. 

The court adopted Grayscale’s argument and agreed that the SEC had not provided sufficient reason for denying Grayscale’s application while approving the Bitcoin futures funds.

With this ruling, the SEC’s primary reason for not approving a Spot Bitcoin no longer carries weight, as the Commission can no longer deny applications solely because the Spot Bitcoin market has no regulated market of significant size. 

The court already found both funds (spot and futures) to be similar, so these exchanges’ surveillance sharing agreements with the Chicago Mercantile Exchange (CME) should be sufficient to deter manipulation in either the spot or futures market. 

While it remains to be seen what step the SEC will take regarding the Court of Appeal’s ruling, there is an increased likelihood that the Commission will have to approve the pending Spot Bitcoin ETF applications except if it can find another reason to deny these proposals.