Crypto trading/market thread

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From what I've been reading, almost half of the trading volume in the ETFs was with the GrayScale ETF. Also, most of that was selling, forcing Grayscale to dump BTC (according to what I read).

Grayscale converted a trust to their ETF. They already had massive assets in the program. Their ETF also has fees more than 2x the other ETFs.

I suspect a lot of GrayScale selling was folks rotating out of GrayScale and into one of the other ETFs. It's not clear what the lag time is between inflows and BTC (underlying asset) buying, but I suspect they have a few days. If I am right in this understanding, BTC will recover next week.
 
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The Grayscale Bitcoin Trust is often believed to be one of the largest single holders of Bitcoin in the world. In a Sept. 6 social media post, Arkham claimed that the trust held over $16 billion worth of the cryptocurrency. Current Arkham data estimates the trust’s holdings at $27 billion, as the price of Bitcoin has risen over the past few months.

Shares of GBTC have been traded since 2013 but were not redeemable for Bitcoin until Jan. 11. Because of the irredeemability of the shares, they have often traded at a steep discount to their net asset value, or the value of the Bitcoin they represent. For example, in October, each share of the trust was worth 16% less than the amount of Bitcoin it represented.

On Jan. 12, the day after multiple Bitcoin ETFs began trading, Arkham Intelligence data showed that the trust sent 894 BTC to Coinbase in one transaction and another 2,607 BTC to other wallets in three other separate transactions. The amount sent to Coinbase represents $41 million in outflows, or approximately 0.15% of the Grayscale trust’s total holdings, while the remaining outflows to other wallets represent an additional $119 million, or 0.44%.

On the same day that these outflows occurred, Bitcoin’s price went into a sudden downturn, falling from approximately $46,000 to slightly above $43,000 by 6:47 pm UTC. The fall resulted in the break of a strong line of support at $44,740.

Despite the small amount of outflows shown by Arkham, some X users theorized that the downturn may have been caused by redemptions of GBTC shares, as holders of these shares finally got the chance to cash out. ...

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Bitcoin and gold in the face of uncertainty​

Bitcoin and gold have shown impressive gains in 2023, defying traditional expectations amid geopolitical uncertainties and increasing interest rates. A recent report from asset manager Fidelity reveals a notable increase in the correlation between these two assets, challenging previous assumptions.

Fidelity’s analysis suggests that in 2023, Bitcoin broke away from its historically inverse relationship with interest rates. Despite global rates surging, a situation typically associated with decreased demand for risk assets, Bitcoin held its ground and rallied. Gold exhibited a similar pattern.

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Short (13 min) vid. Jan 14, 2024

What They're Not Telling You About BlackRock And Bitcoin - Lyn Alden​


In this insightful video, we delve into the complexities of Bitcoin's market dynamics, as explained by financial expert Lyn Alden. Covering key aspects such as the effects of Bitcoin halving, the role of liquidity, and the potential impact of ETFs on the crypto market, Alden offers a nuanced perspective on these critical factors. She also discusses the broader economic conditions surrounding Bitcoin’s halving events and the variability of their impacts. Additionally, Alden touches on the institutional investment behavior in the crypto space and the importance of understanding the slower decision-making process in traditional investment sectors. The video concludes with an exploration of the concentration of Bitcoin custody, the challenges of regulatory adaptation, and the ongoing issues surrounding privacy and self-custody in the evolving landscape of Bitcoin. This comprehensive analysis provides viewers with a deeper understanding of the current and future state of Bitcoin and its place in the global financial ecosystem.

 

Long-Dormant Ethereum Address Comes To Life After 8.5 Years Amid Growing Speculation Of ETH ETF​

An Ethereum (CRYPTO: ETH) address that stood inactive for eight and a half years sprang to life as it transferred 2000 ETH, worth approximately $506,140, Etherscan data confirms.

What Happened: The reactivated wallet held ETH that cost between $0.42 to $1.39 back when the cryptocurrency was in its early days.

This comes amid optimism regarding the potential of an ETH exchange-traded fund (ETF). ETH is up 17% in the last seven days, trading at $2,511. This means the price of ETH has increased by approximately 180,558.27% from its mining days.

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Coinbase, SEC set to face off in federal court over regulator's crypto authority​

Jan 17 (Reuters) - Coinbase (COIN.O), opens new tab will argue at a court hearing on Wednesday that the U.S. securities regulator should drop its case against it because the tokens traded on its crypto exchange are not akin to securities, said a person familiar with the case and court filings.

The hearing is the next major development in a closely watched court battle between Coinbase and the Securities and Exchange Commission that is likely to have implications for digital assets since it could clarify the SEC's jurisdiction over the sector. Coinbase's plan is to lean on a core argument it has made in court filings: that the SEC is overreaching and the assets it lists for trading are not securities.

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Market enthusiasts call it a “golden cross,” indicating a positive shift in asset prices, and now this marker has finally appeared on the bitcoin (BTC) weekly price chart.

The 50-week simple moving average (SMA) on bitcoin has crossed over the 200-week SMA for the first time on record, confirming the golden cross. ...


Given BTC's price history, I'm not sure how it is even possible that this has never happened before.
 
Test 1 of 3 for Ethereum's new Dencun upgrade revealed some bugs that had to be (and were) fixed. Testing continues:


No timeline was mentioned, but my personal guess based upon a very poorly informed understanding of the process is that testing will likely take another month or two to complete assuming no major hiccups are revealed. That would be around mid-late March. SEC has deadlines for deciding spot ETH applications near end of May.
 

'The Dow' for Crypto Markets? New CoinDesk 20 Index Underpins Futures Contracts at Bullish​

  • CoinDesk Indices introduced the CoinDesk 20, intended as a broad cryptocurrency market benchmark that can underpin tradeable products – akin to the S&P 500 or Dow Jones Industrial Average, which play a big role in the stock market.
  • Bullish, the crypto exchange that owns CoinDesk, is offering perpetual futures contracts based on the CoinDesk 20.
Cryptocurrencies just got a new benchmark that, similar to the stock market's Dow Jones Industrial Average, explains how the market is broadly doing.

And the index has an investable product based on it, potentially giving the measure a shot at broader adoption – something previous marketwide benchmarks have failed to win.

CoinDesk Indices on Wednesday introduced the benchmark, called the CoinDesk 20 Index, that tracks the world's largest and most-liquid cryptocurrencies. The behemoths, bitcoin [BTC] and Ethereum's ether [ETH], are among its 20 members, but it goes well beyond them to give traders a diversified summary of the market's performance.

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Most of the CoinDesk 20 are, as I talked about in the Crypto 102 article, the top cryptos (excluding stablecoins) by market cap. I don't understand the rationale they used in their weighting however. Why Dogecoin has a 3% weighting escapes me. I also see that they excluded Tron (TRX) - a top 10 crypto by market cap, while including Aptos and Filecoin (both around 30th by market cap).
 
  • Santiment, an on-chain analytical firm, said Altcoins are creating separation from one another.
  • Michael Van de Poppe has stated that Bitcoin is poised to consolidate within its current range.
  • Coinbase has petitioned the court to dismiss the Securities and Exchange Commission's (SEC) lawsuit.
 
Market commentary on BTC and ETH...

Bitcoin [BTC) has dropped over 15% since the inaugural launch of spot exchange-traded funds (ETFs) last week with several billion in assets flowing out of Grayscale's GBTC. While a chunk of those billions has been from investors moving to lower fee ETFs and another chunk from investors taking profits on GBTC's (and bitcoin's) absolute price rise, at least some of that money is due to traders exiting what's likely been a very profitable bet that GBTC's discount to net asset value (NAV) would narrow.

“It looks like GBTC investors who over the past year had been buying the GBTC fund at a significant discount to NAV to position for its eventual ETF conversion, have been taking full profit post-ETF conversion by exiting the bitcoin space entirely rather than shifting to cheaper spot bitcoin ETFs,” analysts led by Nikolaos Panigirtzoglou wrote.

Before being uplisted to an ETF from a trust, GBTC was one of one of the only ways for stock traders in the U.S. to gain exposure to the price movements of bitcoin without the need to purchase the actual cryptocurrency. That made it the largest regulated bitcoin fund in the world by AUM. The bank had previously estimated that up to $3 billion had been invested in GBTC in the secondary market during 2023 to exploit the trust’s discount to NAV. If this estimate is correct, and given that $1.5 billion has already exited, there could be an additional $1.5 billion to exit the space via profit-taking on GBTC, which will put further pressure on bitcoin prices in the coming weeks. These outflows are also putting pressure on GBTC to lower its fees, the report said, adding that the “GBTC fee at 1.5% still looks too high compared to other spot bitcoin ETFs risking further outflows.” “A lot more capital, perhaps an additional $5 billion-$10 billion, could exit GBTC if it loses its liquidity advantage,” the bank cautioned. As of Friday, GBTC is the most expensive ETF among counterparts, with some charging zero fees for the first six months or until a certain assets under management (AUM) target is reached.

JPMorgan says other spot bitcoin ETFs, minus GBTC, attracted $3 billion of inflows in only four days, and this is comparable to the inflows seen during previous bitcoin product launches. Most of this $3 billion of inflows reflects a rotation from existing bitcoin vehicles such as futures-based ETFs, the report added.


Somewhat ironic that GrayScale's GBTC is the negative driver on the BTC when they (GrayScale) are largely the reason the ETFs exist at all (thanks to winning a decisive court victory after almost a decade of fighting). At any rate, the selling pressure in GBTC will abate at some point and BTC will rebound. The inflows on the other ETFs are strong.

Ether (ETH), the native token of Ethereum’s blockchain, underperformed bitcoin (BTC) in 2023, as the latter’s new-found smart contract, non-fungible tokens (NFT) narrative, and spot ETF optimism drew investor money.

Per analysts, investors will likely have a relook at ether this year as Ethereum is still the world’s leading smart contract blockchain with key upgrades lined up, and ether is widely seen as the next likely candidate to get a spot-based ETF in the U.S.

“ETH could be poised for a breakout year,” Nasdaq-listed crypto exchange Coinbase said in the weekly newsletter. “Last week’s bitcoin ETF news proved to be a boon for ethereum, which briefly spiked above $2,700 — reaching its highest price since May 2022. And there are reasons to be even more optimistic about ETH’s near-term future. For one, several of the firms behind the BTC ETFs — including BlackRock and VanEck — are also plotting ether-based spot ETFs.”
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In addition, Ethereum’s upcoming Dencun upgrade, which aims to improve the mainnet’s scalability by introducing “data blobs,” could galvanize investor interest in the cryptocurrency, according to Coinbase. The upgrade went live on Ethereum’s Goerli testnet early this week.
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:popcorn:
 
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Investors have sold more than $2 billion worth of the Grayscale Bitcoin Trust (GBTC) since it was converted into an exchange-traded fund earlier this month.

A large chunk of that exodus was FTX's bankruptcy estate dumping 22 million shares, according to private data CoinDesk reviewed and two people familiar with the matter.
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The data CoinDesk saw suggests FTX accounted for much of that. The 22 million shares it sold – which took FTX's GBTC ownership down to zero – were worth close to $1 billion.
...
... In theory, now that FTX is done selling its substantial holdings, the selling pressure could ease since a bankruptcy estate liquidating holdings is a relatively unique event.
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If that is correct, the JPMorgan analysis posted previously is likely too pessimistic.
 
They're hedging their bets.

I'd agree that bitcoin's future is probably more-certain than the dollar's. That doesn't mean that it's assured...
 
If Bitcoin didn't exist where would they be putting that $433M each and every day?
 
That $433M represent inflows into the spot BTC ETFs. It's presumably mostly institutional investors wanting BTC exposure in their portfolios. I'm going to guess if it weren't flowing into the BTC ETFs, it would likely just be distributed amongst vehicles already in their existing portfolios (stocks, bonds, etc.).
 
If Bitcoin didn't exist where would they be putting that $433M each and every day?
I have no idea.

I can't understand the mindset of the Globalist crony-rich.

I'd say they'd probably keep on buying private homes...make more-certain that the Deplorables own nothing.

Beyond that...maybe, gold? Can a publicly-traded company put its investments into bullion? I don't know.
 
That $433M represent inflows into the spot BTC ETFs. It's presumably mostly institutional investors wanting BTC exposure in their portfolios. I'm going to guess if it weren't flowing into the BTC ETFs, it would likely just be distributed amongst vehicles already in their existing portfolios (stocks, bonds, etc.).

And you think they are actually buying Bitcoins with that money? Where are the transactions on the blockchain. Or are they instead just building a new Derivatives position to play their normal games and steal retail money.
 
The technical aspects of bitcoin, lead to some interesting questions.

For example, who is entrusted with the key set? If a hostile takeover of BlackRock happens, maybe a Chinese "investment fund" or even a non-Woke corporation or investment pool...is there any protection against key personnel "losing" the keysets? Or even absconding with some or all of it?
 
And you think they are actually buying Bitcoins with that money? ...

Yes, that is what is being reported by the Bitcoin analysts and media who study the blockchain movements.
 
For example, who is entrusted with the key set? ...

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Do spot Bitcoin ETFs have custodianship risk?

Most spot Bitcoin ETFs rely on a third-party custodian to actually store the Bitcoin they hold — much like how spot gold ETFs often keep their physical gold holdings in the vault of a third-party custodian.

Eight out of the 10 currently-trading spot Bitcoin ETFs use Coinbase (COIN) as their Bitcoin custodian. The only exceptions are the Fidelity Wise Origin Bitcoin Fund (FBTC), which uses Fidelity itself as a custodian, and the VanEck Bitcoin Trust (HODL), which uses Gemini.

Coinbase's dominance in Bitcoin ETF custodianship has created concerns about custodianship risk. If Coinbase ran into severe financial trouble in the future — for example, due to a cyberattack, a government penalty, or a decline in its revenue — would the holdings of Bitcoin ETFs be safe?

There are mechanisms by which ETFs — and investors themselves — could recover their holdings in the event of a Coinbase bankruptcy, but they wouldn't necessarily be instant or automatic. So custodianship risk may be something to consider while shopping for a spot Bitcoin ETF.
...

 
Looks like the Grayscale selling has a bit more to go...

 


Grayscale selling still appears to be matching the inflows to the other ETFs. Grayscale really needs to fix their ultra high ETF fee.
 
Ah.. That's where the current selling pressure is coming from....

 

Bruised by stock market, Chinese rush into banned bitcoin​

SHANGHAI/HONG KONG, Jan 25 (Reuters) - Dylan Run, a Shanghai-based finance sector executive, started moving a bit of his money into cryptocurrencies in early 2023, when he realized that the Chinese economy and its stock markets were going downhill.

Crypto trading and mining has been banned in China since 2021. Run used bank cards issued by small rural commercial banks to buy cryptocurrencies through grey-market dealers, and capped each transaction at 50,000 yuan ($6,978) to escape scrutiny.

"Bitcoin is a safe haven, like gold," says Run.

He now owns roughly 1 million yuan worth of cryptocurrencies, accounting for half of his investment portfolio, compared with just 40% in Chinese equities.

His crypto investments are up 45%. China's stock market, meanwhile, has been sinking for 3 years.

More:

 
I had not considered that economic distress in China might push locals there to buy crypto. Interesting.
 
Developers will run through Dencun on the Sepolia and Holesky testnets on Jan. 30 and Feb. 7, putting the upgrade on track to reach the main network in late February or early March.
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That schedule is a bit more aggressive than what I was thinking earlier.
 
I had not considered that economic distress in China might push locals there to buy crypto. Interesting.
China is a police state and Social-Credit-Score dystopian hell.

It will indeed be interesting to see how it fares there - and whether buying can be seen as diversified, or concentrated in state-owned banks and corporations or other shadowy fronts.

Also whether the Party tries to contain it with Internet blocking.
 


On the back of GBTC selling and Mt. Gox bankruptcy liquidation, the government going to try and hammer BTC into dust. BTC is likely to go down a good bit before finding it's wings again. Might be the last great buying opportunity of a lifetime when BTC eventually bottoms.

Edit: $130M worth of BTC is a fraction of what GBTC has been selling daily since the ETFs were approved. This isn't going to affect the market as much as I initially thought it might.
 
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While many are concerned that large sell-offs could continue as Grayscale still holds more than 500,000 BTC, analysts at JPMorgan think the GBTC profit-taking is mostly concluded.

The analysts, led by Nikolaos Panigirtzoglou, previously estimated that GBTC would see $3 billion in outflows. With the total now past $4.3 billion, they said that the expected profit-taking has largely happened already. "In turn, this would imply that most of the downward pressure on Bitcoin from that channel should be largely behind us," the analysts said in a note on Thursday.
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BTC has been rising from the lows since yesterday, but it's not clear to me when the selling pressure from Mt. Gox will begin so there may be another wave of downside before BTC begins popping for reals.
 
I had not considered that economic distress in China might push locals there to buy crypto. Interesting.
Yes, interesting but also sad.
They don't have the antigold narrative over there, gold was even advertised by gov and media.
Banks facilitating gold accounts and offering coins in their halls.
And still taking legal risks trying crypto.
 
I think the allure for crypto over gold for the Chinese is about jurisdiction. They want assets that are outside of China's control/borders.
 
Web3 payments infrastructure provider Transak joined Visa Direct, making it easier for its users to convert their cryptocurrency holdings into regular currency.

Transak’s payment and onboarding services allow users to buy and sell crypto assets, handling the know-your-customer (KYC) requirements, risk monitoring and compliance on behalf of its clients, which include MetaMask and Coinbase Wallet. The Web3 startup raised $20 million last year in a Series A round to fund a global expansion. The Visa Direct program lets third-party providers connect to Visa’s network and routes payments directly onto Visa cards.
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More offramps (allowing conversion of crypto into fiat) is a good thing.
 


I don't know if his numbers are correct, but continued inflows will definitely have an impact as it does mean consistent buying pressure.
 
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