The Grayscale Effect: The Bitcoin Price Has A New Prime Trading Hour
17 Januar 2024 - 10:20AM
NEWSBTC
The crypto trading landscape is witnessing a paradigm shift with
the recent introduction of spot Bitcoin ETFs in the United States,
catalyzing a new wave of trading dynamics. Bloomberg analyst James
Seyffart revealed that the total trading volume of the US spot
Bitcoin ETFs over a span of the first three days approached the $10
billion mark. This substantial volume was predominantly led by
Grayscale’s GBTC, with a three-day trading volume amounting to
$5.174 billion, followed by BlackRock’s IBIT at $1.997 billion, and
Fidelity’s FBTC at $1.479 billion, cumulating to an aggregate
trading volume of approximately $9.771 billion. Update on the
#Bitcoin ETF Cointucky Derby. The ETFs have traded almost $10
billion total over 3 days. Will have updated flows and assets later
tonight or tomorrow morning. pic.twitter.com/OnpCshjYJP — James
Seyffart (@JSeyff) January 16, 2024 Despite these impressive
figures, Bitcoin’s price performance has not mirrored the trading
volume’s growth, a phenomenon analysts attribute to a strategic
pivot among Grayscale’s clientele. Investors are increasingly
transitioning their capital from Grayscale’s GBTC, with its 1.5%
annual fee, to more cost-effective spot BTC ETFs, some offering
fees as low as 0.25%. This shift, however, is not seamless due to
the cash-redemption process prescribed by the Securities and
Exchange Commission (SEC). Consequently, investors find themselves
navigating a temporal gap, redeeming cash and reallocating it to
other spot BTC ETFs, typically a few days later. Understanding The
Grayscale Effect On Bitcoin Price This operational characteristic
of Grayscale’s GBTC, which does not facilitate same-day cash
redemptions for BTC and operates on a T+2 or T+1 settlement basis,
has given rise to a discernible trading pattern. Alex Thorn, Head
of Research at Galaxy, provided insight into this phenomenon,
stating: We’re seeing significant Bitcoin trading volume now during
US hours, particularly between 3-4pm NY now during the ETF fix,
escalating into what has lately been a predictable Grayscale dump
into the close. The game is evolving. Echoing this sentiment, Daan
Crypto Trades observed a consistent pattern in Grayscale’s
operations, highlighting, “Grayscale is sending X amount of Bitcoin
to Coinbase ~1 hour before the market opens every trading day. Will
be a good indicator to gauge how bad the outflows of GBTC are I
think. 4K BTC was sent Friday. 9K BTC was sent [Monday].” Related
Reading: Grayscale Transfers Almost 12,000 BTC To Coinbase, Bitcoin
Price Reacts Further substantiating these observations, Maartunn
from CryptoQuant remarked on the tangible outflow of Bitcoin from
Grayscale’s fund, particularly to Coinbase, stating, “Data doesn’t
lie, as seen once again. Shortly after the inflow of Bitcoin from
Grayscale to Coinbase, the Coinbase Premium Gap, previously
positive, turned negative for the first time this year, indicating
strong selling pressure from Coinbase.” He emphasized the
correlation between these events and the increased trading volume
on Coinbase, especially during the trading hours of the American
stock market. Related Reading: Bitwise CIO Equates Bitcoin ETF
Impact To 1.4 Halvings: What This Means Crypto analyst James Van
Straten further detailed the pattern of Grayscale redemptions to
Coinbase Prime, noting, “We’re starting to see a pattern of
Grayscale redemptions to Coinbase Prime just before the market
opens. 9k Bitcoin ($387M) sent to Coinbase Prime all before 2:30
(GMT) on Jan 16. On Jan. 12, 4k Bitcoin before the market opened.”
As these patterns continue to manifest and evolve, the Grayscale
effect is evidently reshaping the prime trading hour for Bitcoin,
introducing a new layer of complexity and strategy in the crypto
trading arena. Importantly, the Grayscale selling pressure will not
last forever, but as long as it exists, it could continue to put
some pressure on the Bitcoin price. Until then, following the
Grayscale flows could be crucial for determining BTC price trends.
Grayscale still holds circa 587,000 to 617,000 Bitcoin, depending
on the data provider. At press time, BTC traded at $42,754.
Featured image from DALL·E 3, chart from TradingView.com
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