Posted on

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 

Posted on

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 

Posted on

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

Posted on

$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

Posted on

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

Posted on

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

Posted on

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 

Posted on

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 

Posted on

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)

Posted on

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. 

Posted on

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

Posted on

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)

Posted on

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.  

Posted on

Renowned Economist Explains Why Grayscale’s Win Is Not Good For Bitcoin Price

One of the major highlights of Grayscale’s victory over the US Securities and Exchange Commission (SEC) was its positive effect on Bitcoin’s price. However, renowned economist Peter Schiff has explained why Grayscale’s win may not be good for Bitcoin in the long run. 

A GBTC ETF ‘Bearish’ For Bitcoin

Schiff tweeted that the GBTC fund becoming a spot ETF (Exchange-traded Fund) is “actually bearish” for the flagship cryptocurrency as he said this move could potentially increase Bitcoin’s “tradable supply.”

If approved, investors in the GBTC fund will now be able to redeem their Bitcoin, which Schiff has highlighted is bad for Bitcoin’s price and the market as GBTC will have to sell BTC into the market, thereby increasing the tradable supply. 

Schiff’s concern probably stems from the fact that GBTC reportedly owns over 3% of Bitcoin’s circulating supply, so a sell-off due to redemptions could significantly impact the market, causing Bitcoin’s price to reduce.

However, other X (formerly Twitter) users quickly pointed out that other ETF applications will likely be approved alongside Grayscale’s application. As such, there will be enough demand to balance out the increase in supply that could result from Grayscale’s redemptions. 

Grayscale had applied to the SEC to convert its GBTC fund into a Spot Bitcoin ETF. However, the regulator rejected the application, leading Grayscale to file a lawsuit against the SEC, stating that the Commission acted arbitrarily and capriciously in its disapproval order. 

Following the Appeal court’s ruling in favor of Grayscale, the SEC now has to review the asset manager’s application again with the possibility of an approval higher this time. This is because Grayscale has been able to establish before the court that it should enjoy the same treatment given to Bitcoin Futures ETF which the Commission has had no problem approving. 

Bitcoin price chart from Tradingview.com (Grayscale)

The SEC’s Next Steps

Legal expert Jake Chervinsky also chimed in to state that the court delivered a “huge embarrassment” for the SEC. As to the next steps that the regulator might take, Chervinsky highlighted four theories.

Firstly, he believes the SEC could just pick another reason to deny Grayscale’s proposal, which could lead to another long-running legal battle between both parties. Apparently, the court had ruled that the Commission didn’t provide sufficient reason to deny Grayscale’s application as it faulted the “significant market” test size as wrong. 

His second theory is that the SEC will choose to abide by the court’s decision and use that as an excuse to drop its “anti-ETF position.” 

Furthermore, the legal expert noted that the SEC may have no choice but to approve the pending ETF applications as there is “political pressure” on the SEC. According to him, the world’s largest asset manager, BlackRock, and its CEO, Larry Fink, are lobbying for their application to be approved.  

Lastly, Chervinsky believes that the SEC’s Chair Gary Gensler could use this to spin the anti-crypto narrative by approving these ETFs to show that the Commission is willing to approve products that abode by their regulations. 

Posted on

The $20 Billion Delay: Appeal Court Pushes Back Decision On Grayscale Spot Bitcoin ETF

The D.C. Circuit Court of Appeals was expected to give a ruling on Grayscale’s Spot Bitcoin ETF lawsuit against the United States Securities and Exchange Commission (SEC) on August 22 following its failure to do so on August 18. However, the crypto community would have to wait longer as the court has once again failed to make a decision.

Court Delays Spot Bitcoin ETF Decision For The Third Time

According to a tweet by Grayscale’s Chief Legal Officer Craig Salm, the appeal court failed to make a decision regarding his company’s lawsuit against the SEC. However, he pointed out that there were no rulings for that day in what might be a move to quench any notion that the court was intentionally stalling the case.

This marks the third delay of the much-anticipated verdict, as the court had previously been expected to give a decision on August 15 and then August 18. So it remains uncertain when a decision could come next as legal experts had earlier projected the court to give its verdict this month. 

Grayscale’s lawsuit against the SEC dates back to last year when the company reportedly tried to persuade the Commission to convert its $20 billion Grayscale Bitcoin Trust (GBTC) to a Spot Bitcoin ETF, which the SEC rejected. 

Following the rejection, Grayscale sued the regulator, arguing that it had acted indiscriminately by not giving its request the same treatment it does to similar investment funds. 

Grayscale believes that Spot Bitcoin ETFs should be approved like Bitcoin futures ETFs. In its final oral argument in March, the crypto firm argued that the SEC’s disapproval order against it was contradictory. It emphasized the regulator’s inconsistency in denying a Spot Bitcoin ETF while approving a Bitcoin futures ETF.

The company further argued that both investment vehicles pose the same risk of fraud and manipulation. It also stated that the pricing of both futures and spot bitcoin markets are “99.9% correlated,” which means they are subject to the same risk. 

As such, since the SEC found the CME’s surveillance sharing agreement sufficient enough to protect against the risks in the futures market, it should be able to deem it sufficient to approve Spot Bitcoin ETFs.

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

Why Grayscale’s Case Could Be A Game Changer

Grayscale is one of several financial firms that have applied to the SEC to offer a Spot Bitcoin ETF. Interestingly, the company filed this application while it awaits a decision from the court regarding its lawsuit against the SEC. 

However, considering that the SEC has remained reluctant to approve these applications, a verdict in favor of Grayscale could potentially force the hands of the Commission to finally approve a Spot Bitcoin ETF. 

Such a verdict will undoubtedly be a boost for the crypto industry as it would pave the way for institutional investors to have direct access to crypto assets, something which could further spur the mass adoption of cryptocurrencies.