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All Quiet On The Bitcoin ETF Front – Should You Be Paranoid?

The recent approval and launch of spot Bitcoin ETFs have brought about notable changes in market dynamics. Among the most significant players affected is Grayscale, a leading institution in the crypto space.

Grayscale’s Bitcoin Holdings Experience Decline

Grayscale, known for its Bitcoin Trust (GBTC), held the highest BTC market capitalization among institutions. However, an in-depth analysis reveals a decline in its Bitcoin holdings over recent months.

From nearly 620,000 BTC in January, Grayscale’s holdings have dwindled to a little over 300,000 BTC at the time of reporting. This decline raises questions about the factors influencing institutional investment strategies in the crypto sector.

Spot Bitcoin ETFs Witness Fluctuating Flows

Following the launch of spot Bitcoin ETFs, the market has witnessed fluctuating flows across various platforms. While certain ETFs have experienced significant volume, others have recorded zero flows, indicating a mixed response from investors. BlackRock’s IBIT and Grayscale’s GBTC have been among the few to register notable flows, with both inflows and outflows observed in recent days.

A closer look at the data reveals consecutive outflows in Bitcoin spot ETFs over the past few days, reminiscent of similar trends observed in March. On the 15th and 16th of April, outflows amounted to nearly $27 million and $58 million, respectively.

Despite these outflows, analysts point out that such fluctuations are not uncommon in the ETF market and may not necessarily indicate product failure.

Analysis Of Flow Patterns Provides Insight

Examining specific flow patterns offers valuable insights into investor behavior and market sentiment. While Grayscale’s GBTC experienced consecutive outflows, BlackRock’s IBIT saw inflows on certain days. This variance underscores the diverse strategies adopted by investors in response to the evolving crypto landscape.

It’s important to note that zero inflows on certain days are considered normal for ETFs, according to analysts. They emphasized that such occurrences are commonplace across various ETFs and should not be interpreted as a sign of product failure. Instead, they reflect the ebb and flow of investor interest in a rapidly evolving market.

Future Outlook For Bitcoin ETFs

As Bitcoin ETFs continue to gain traction, the market is poised for further evolution. While some platforms may experience fluctuations in flows, the overall trajectory of institutional investment in the crypto sector remains optimistic.

The approval and launch of spot Bitcoin ETFs have sparked shifts in market dynamics, impacting institutions like Grayscale and prompting fluctuations in ETF flows. Despite the volatility, analysts remain optimistic about the long-term prospects of Bitcoin ETFs and their role in shaping the future of finance.

Featured image from DataDrivenInvestor, chart from TradingView

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Genesis Acquires Over 32,000 BTC After Offloading GBTC Shares

Embattled crypto lender Genesis Global Capital has continued to ramp up efforts to pay up creditors after filing for bankruptcy protection in January 2023. As part of these efforts, Genesis has now reportedly sold off the entirety of its Grayscale GBTC holdings to acquire a substantial amount of Bitcoin in order to implement its repayment strategy. 

Genesis Converts GBTC Shares To Bitcoin In Preparation For Debt Settlement

According to a Friday report by Bloomberg Law, Genesis finalized the sale of its 36 million GBTC shares, as revealed by the company’s lawyers in a court filing on April 2. Genesis had initially received legal approval to liquidate its GBTC holdings on February 2 with each unit share valued at $38.50. However, court documents showed that the current price of GBTC as at the time of sale on April 2 was $58.50 resulting in a total sale price of $2.1 billion. 

Bloomberg’s report disclosed that the bankrupt crypto lender then used these proceeds to purchase 32,041 Bitcoin at a market price of $65,685, which will be distributed to creditors as part of its repayment plan, especially those who were previously enrolled in the Gemini Earn program. 

These recent transactions align with Genesis’s bankruptcy plan which allows the conversion of GBTC shares to either Bitcoin or direct cash for the settlement of its existing debt. Currently, the crypto lender owes $3.5 billion to creditors and will commence repayment following court approval. 

However, Genesis faces fierce opposition from its parent company, Digital Currency Group (DCG), over its proposed repayment plan. In a petition filed in February, DCG argues that its bankrupt subsidiary looks to settle creditors’ claims at amounts higher than their respective entitlement. 

DCG believes such a repayment strategy violates the Bankruptcy Code and is “unfair” since it will only benefit senior creditors who will largely gain from an appreciation in Genesis’s crypto assets value while equity holders and company stakeholders are left in unfavorable positions.

Founded in 2013, Genesis is one of the prominent crypto firms to file for bankruptcy. Its insolvency is largely linked to the sudden collapse of the defunct crypto exchange FTX.

Bitcoin Price Overview

In other news, Bitcoin gained by 2.55% in the last day to reach a price of $69,339. Such price gain would be encouraging to investors especially following the token’s overall negative performance in the past week. On higher timeframes, BTC largely remains largely bullish as anticipation continues to build ahead of the halving event on April 19.  The fourth halving in Bitcoin’s history is expected to reduce the mining reward from 6.25 BTC to 3.125 BTC.

GenesisBTC trading at $69,314 on the daily chart | Source: BTCUSDT chart on Tradingview.com

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Cardano Price Tumbles As Grayscale Sells All ADA From Large Cap Fund

The Cardano (ADA) price is experiencing a notable decrease, dropping by 12% since the start of the week, with a 2.6% dip recorded today alone. Despite this, with a market capitalization of $20.27 billion, ADA maintains its position as the 9th largest cryptocurrency.

This recent downturn comes amidst a broader crypto market experiencing mostly sideways to downward movement, with ADA recording more significant losses compared to its peers like ETH, which is down by 7.4%, BNB by 6.4%, Solana by 6.3%, and XRP by 6.1%.

Grayscale Dumps Cardano From GDLC

A pivotal factor behind Cardano’s sharper decline could be linked to the recent liquidation of all ADA holdings by the Grayscale Digital Large Cap Fund (GDLC). The fund, which currently boasts assets under management (AUM) worth $579 million, had Cardano constituting 1.62% of its portfolio on January 4, which amounts to approximately $9.4 million.

On Thursday, Grayscale Investments announced the decision as part of its first quarter 2024 review. According to the official press release, the adjustment to GDLC’s portfolio entailed the selling of Cardano and reallocating the cash proceeds to existing Fund Components, proportional to their weightings.

This rebalancing led to the removal of ADA from GDLC’s portfolio. The final composition of the fund as of April 3, 2024, includes Bitcoin (70.96%), Ethereum (21.84%), Solana (4.52%), XRP (1.73%) and Avalanche (0.95%).

The press release detailed, “In accordance with the CoinDesk Large Cap Select Index methodology, Grayscale has adjusted GDLC’s portfolio by selling Cardano (ADA), and using the cash proceeds to purchase existing Fund Components in proportion to their respective weightings. As a result of the rebalancing, Cardano (ADA) has been removed from GDLC.”

Grayscale also highlighted the quarterly evaluations of the GDLC, DEFG, and GSCPxE Fund compositions, aimed at updating existing Fund Components or including new ones based on index methodologies provided by the Index Provider. This practice ensures that the funds’ holdings reflect the most current market trends and asset performance.

Notably, the Grayscale Smart Contract Platform Ex-Ethereum Fund still contains Cardano. The cryptocurrency is the second-largest position after Solana (58.41%), with a weighting of 14.56%.

In response to these developments, Charles Hoskinson, the founder of Cardano, offered a terse commentary via X, stating, “Wall Street give; Wall Street take.”

This succinct remark encapsulates the volatile nature of crypto investments and the significant impact that major financial players like Grayscale can have on the market dynamics of digital assets.

At press time, ADA was trading at $0.57. In the short term, the 100-day EMA at $0.58 is the key resistance that ADA needs to overcome in order to develop new bullish momentum. The 100-day EMA has served as strong support three times since mid-January. After the recent dip below this indicator, ADA is struggling to reclaim it. In the medium term, the bulls need to break above the $0.68 level.

Cardano ADA price

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Bitcoin Final Dance: Analyst Eyes Final Peak Ahead Of Halving

Once again, there is hope for Bitcoin (BTC) as Michael Van De Poppe, a cryptocurrency expert, has spotlighted the potential for the crypto asset’s price to reach a new all-time high before the highly anticipated Halving event commences.

One Final All-Time High For Bitcoin Before Halving

The price of Bitcoin is presently exhibiting new bearish activity, which might trigger negative sentiments in the market over the next few days. Despite the notable decline, Michael Van De Poppe is optimistic that BTC will attain a new height prior to Bitcoin Halving expected to occur this month’s end.

According to the analyst, the digital asset is currently in a consolidation zone. He further identified two distinct crucial levels within the lower timeframes such as the $67,000 threshold as a support level and the $71,700 mark as a final break out towards the peak.

It is worth noting that Michael Van De Poppe previously forecasted that Tuesday is probably when the real moves are expected to begin as Bitcoin consolidates. Thus, if the coin holds the $67,000 level, he will propose a one-last peak test ahead of the halving.

Bitcoin

Poppe seems to be confident about his prediction now as he asserts that if one of the two aforementioned crucial levels develops, it will determine the direction of Bitcoin. Due to this, he believes BTC will experience one final pre-halving all-time high.

The post read:

Bitcoin is calmly consolidating. Crucial levels (lower timeframes): $67,000 to hold for support, $71,700 for a final breakout towards the ATH. If either of the two happens, probably direction is chosen. I think we will have one final ATH test before halving happens.

Following the recent decline, Poppe has issued a warning to the crypto community on how to interact with the price action. “You do not want to chase those massive green candles,” he stated.

He advocates entering the market when BTC‘s price is down by 15% to 40%. Additionally, he addressed those considering investing in altcoins, urging them to invest when altcoins are down by 25% to 60%.

Possible Triggers For The Correction

As of press time, Bitcoin’s price is trading at $65,843, demonstrating a decline of over 5% in the daily timeframe. Its trading volume has seen a significant uptick of 66% in the past day, while its market cap has decreased by 5%.

Since its peak of $73,000, achieved in early March, the price of Bitcoin has dropped by nearly 10%. One factor considered to have contributed to the retracement was the influx of funds into US Spot Bitcoin Exchange-Traded funds (ETFs), which has since started to calm down gradually.

Data from Wu Blockchain revealed that the products saw an overall net outflow of $85.84 million on Monday. BlackRock ETF IBIT recorded a net inflow of $165 million, while Grayscale ETF GBTC experienced a single-day net outflow of $302 million. Presently, the historical cumulative net inflow for the BTC spot ETFs is pegged at $12.04 billion.

Bitcoin

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Beyond Bitcoin ETFs: ‘There Are Other Players Controlling This Market’ – Says Analyst

Recent observations by Eric Balchunas, a senior ETF analyst at Bloomberg, suggest that the movements in Bitcoin’s price are influenced by factors beyond just the flows of spot Bitcoin Exchange Traded Funds (ETFs).

According to Balchunas, who shared his insights on X, “bigger forces at work” shape the largest cryptocurrency’s valuation. This indicates that the correlation between spot ETF flows and Bitcoin’s price action is less direct than some assume.

The ETF Influence And Market Movements

This analysis emerges amid a period of significant financial activity for Grayscale, which has seen substantial outflows, described by Balchunas as experiencing a “second wind” of departures.

Yesterday, Grayscale reported outflows of $281.57 million, marking a notable decrease in its Bitcoin holdings by more than 40% since the inception of spot Bitcoin ETFs on January 11.

This scenario highlights a broader narrative within the cryptocurrency investment sphere, where the relationship between ETF activities and Bitcoin’s market performance is complex and multifaceted.

Despite the record outflows from Grayscale’s GBTC, Bitcoin’s market behavior has shown resilience. The cryptocurrency recently exceeded the $67,000 mark before experiencing a slight retracement, currently trading at a price of $66,106.

Bitcoin price chart on TradingView.com

This movement coincides with comments from Federal Reserve Chair Jerome Powell, which seemingly spurred a rally across various risk assets, including cryptocurrencies.

Powell’s reassurances regarding the outlook on rate cuts prompted a slight recovery in Bitcoin’s price, demonstrating how external economic factors and sentiments can impact cryptocurrency markets. It is worth noting that Bitcoin traded below $65,000 before the announcement.

On-Chain Insights And Bitcoin Future Prospects

Further deepening the analysis, Charles Edwards, a crypto analyst, recently suggested that pullbacks are common in Bitcoin’s bull runs, with corrections of around 30% within the realm of possibility.

In related news, data from the on-chain analysis platform CryptoQuant has recently indicated a nearly 40% reduction in Bitcoin’s supply on exchanges over the past four years.

This trend points towards a bullish sentiment within the Bitcoin ecosystem, suggesting that investors are inclined to hold onto their assets in anticipation of future value increases.

Moreover, CryptoQuant’s data reveals that Bitcoin’s demand has consistently outstripped its supply since 2020, a trend that supports the asset’s value on the premise that scarcity enhances perceived value.

This dynamic is expected to intensify following the upcoming Bitcoin halving event, which will reduce the miners’ supply by half, potentially leading to further increases in Bitcoin’s price.

Featured image from Unsplash, Chart from TradingView

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Grayscale Submits Revised Application For Ethereum Spot ETF – What’s New?

Asset management firm Grayscale Investments has updated its application for an Ethereum spot ETF (exchange-traded fund) with the United States Securities and Exchange Commission (SEC).

Ethereum Spot ETF Case Just As Solid As Bitcoin’s, Grayscale Argues

According to a recent post on X by Craig Salm, Grayscale’s chief legal officer, the asset management firm has revised its 19b-4 form for an Ether spot ETF. Salm claimed that this move was “important” in an effort for Grayscale to list and trade shares of its Ether Trust on the New York Stock Exchange (NYSE) Arca.

The chief legal officer stated in his post that investors “want and deserve access” to Ethereum via a spot exchange-traded product, likening the situation to the Bitcoin ETF story. “We believe the case is just as strong as it was for spot Bitcoin ETFs,” Salm said.

The asset manager is amongst the numerous firms looking to issue the first Ethereum spot ETF in the United States, having filed an application with the SEC on October 10, 2023. However, these ETF applications have faced delays multiple times, with the most recent coming against BlackRock’s filing on March 4, 2024.

As a result, the likelihood of the SEC approving an Ethereum spot ETF has taken a nosedive in recent weeks. Once-optimistic Bloomberg ETF expert Balchunas even revealed in his latest analysis that the ETH funds now have only a 35% chance of approval.

SEC Chairman Faces Pressure Over Crypto Approval

Two US senators of the Democrat party, Sens. Laphonza Butler of California and Jack Reed of Rhode Island, have urged the SEC chairman to avoid approving crypto investment products. In a letter dated March 11, the lawmakers, who are also members of the Senate Banking Committee, asked the Commission to limit future crypto ETF applications.

Following the approval of 11 Bitcoin spot ETFs in January, the attention of the crypto public has somewhat turned to whether the SEC will do the same for the Ethereum versions. However, this latest letter from the senate seems to further hurt the chances of an ETH ETF approval.

A part of the letter read:

Retail investors would face enormous risks from ETPs referencing thinly traded cryptocurrencies or cryptocurrencies whose prices are especially susceptible to pump-and-dump or other fraudulent schemes,” they said. “The Commission is under no obligation to approve such products, and given the risk, it should not do so.

As of this writing, the price of the Ethereum token stands at $3,731, reflecting a 1.2% increase in the past day.

Grayscale

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Bitcoin ETFs See Record $1 Billion Inflows, Pushing Price Over $73,500

Yesterday, the Bitcoin price journey resembled a high-intensity rollercoaster ride, initially soaring past the $73,000 mark before encountering a tumultuous liquidation event. This event saw over $361 million worth of leveraged trades unwound, compelling the BTC price to retract sharply to below $68,300.

The drastic price fluctuation primarily affected long position holders—investors who speculated on a continued price rise—with a staggering $258 million wiped out. Subsequently, Bitcoin’s price staged a remarkable V-shaped recovery, during which short sellers found themselves on the losing end, with just over $103 million in positions liquidated.

This data by Coinglass marks the event as the most significant purge of long positions since March 5. At that time, Bitcoin experienced a decline to $60,800 following its climb to a then all-time high of approximately $69,000.

Bitcoin ETFs Register Record $1 Billion Inflows

Perhaps spurred by the opportunity presented by the price dip, investors in spot Bitcoin Exchange-Traded Funds (ETFs) engaged in a buying spree, unprecedented in its intensity. For the first time, spot Bitcoin ETFs witnessed a daily inflow surpassing $1 billion on Tuesday, March 12, primarily driven by an inflow of $849 million to BlackRock’s IBIT. According to detailed data released by Farside Investors, the total net inflows across all Bitcoin ETFs were at $1045 million (or $1.045 billion).

The second largest Bitcoin ETF to date, Fidelity, saw a rather quiet day  with FBTC taking in only $51.6 million, while Ark Invest ($93 million), Bitwise ($24.6 million), Valkyrie ($39.6 million) and VanEck ($82.9 million) saw relatively strong capital inflows. Notably, Grayscale‘s GBTC saw a waning outflow of just $79 million.

Bitcoin analyst Alessandro Ottaviani shared his insights on X, underscoring the magnitude of these inflows, “1 Billy of Total net Inflow! ONE BILLION DOLLARS! […] In the last twelve trading days, The Nine inflow has been $9.2b, with an average of $768m per day. Just imagine if we keep this pace and it is confirmed that GBCT outflow is almost exhausted.”

Crypto Quant analyst Maartunn provided additional context to the inflow’s impact, revealing, “JUST IN: The Bitcoin Exchange-Traded Fund (ETF) has experienced its highest inflows ever, with an additional 14,706.2 BTC.” This statement further emphasizes the substantial increase in Bitcoin’s demand, potentially setting it up for a major supply squeeze.

Adding to the conversation, crypto analyst @venturefounder suggested potential future price movements based on the current trend, “Absolute Bitcoin madness […] The 5-day moving average net inflow has fully recovered to peak. So… probably HIGHER. If this continues, $80-90k by the end of month is not far fetched. No correction has lasted longer than 24 hours on the weekdays. Interestingly, the first major correction of the 2021 cycle came when price went 2x previous ATH. So could we see no major correction until $120k?”

At press time, BTC already surpassed the $73,500 mark and traded at $73,392.

Bitcoin price

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800,000 ETH Flow Out Of Centralized Exchanges In 2024 – Bullish Sign For Ethereum Price?

The price of Ethereum has been a joy to watch since the start of 2024, climbing by more than 30% in less than two months. The latest on-chain revelation suggests that ETH investors are approaching the market with more confidence, as the cryptocurrency’s price rally seems to be far from over.

$2.4 Billion Worth Of ETH Leaves Exchanges: CryptoQuant

A pseudonymous analyst on CryptoQuant’s Quicktake revealed that significant amounts of the Ethereum token have been making their way out of exchanges in the last few weeks. This observation is based on the “Exchange Reserve” metric, which tracks the amount of ETH tokens in the wallets of all centralized exchanges.

When the value of this metric increases, it implies that investors are making more deposits than withdrawals of an asset (Ether, in this case) into centralized exchanges. Meanwhile, the metric’s decline means that more assets are flowing out than entering these platforms.

According to data from CryptoQuant, more than 800,000 ETH (equivalent to approximately $2.4 billion) has flowed out of cryptocurrency exchanges since the turn of the year. Typically, the movement of significant amounts of cryptocurrencies out of these platforms suggests a rise in investor confidence.

Ethereum

As the CryptoQuant Quicktake author noted, this reduction in Ether’s exchange reserve balance could be a bullish catalyst for the altcoin’s price. A sustained decline in the ETH’s supply on exchanges could trigger a supply crunch, potentially driving the Ethereum price higher.

As of this writing, the Ethereum price stands at around $2,920, reflecting a 1.8% decline in the past day. Nevertheless, the “king of altcoins” is still in the green on the weekly timeframe, with an almost 5% price jump over the last week.

Ethereum Price Rise Due To Anticipation Of Dencun Upgrade: Grayscale

In a recent report, Grayscale has offered commentary on Ethereum’s positive price performance so far in 2024. The asset management firm tied ETH’s bullish trajectory to the upcoming Dencun upgrade of the Ethereum network.

William Ogden Moore, Grayscale’s research analyst, wrote in the report:

We believe that recent price performance reflects the market’s anticipation of this upgrade, as Ethereum (up 26% YTD) has outperformed the broader Smart Contract Platforms Sector (up 3% YTD) since January 1st, 2024.

The Dencun upgrade, which is less than a month away, will aim to enhance Ethereum in terms of scalability and cost-effectiveness. It is also expected to help the network compete with “faster chains in the Smart Contract Platforms Crypto Sector, such as Solana.”

Another narrative that may be propelling the price of ETH is the approval of Ethereum spot exchange-traded funds (ETFs) in the United States. Interestingly, Grayscale is amongst the asset managers looking to debut an Ether spot ETF.

Ethereum