Bitcoin is trying to maintain a level of over $50,000, after the rapid gains recorded earlier this week, which took it to the highest levels that we have seen since late 2021. While this rise led to gains across the board for cryptocurrencies, with Ethereum recording the highest daily close since April of 2022, hitting $2,660.
Bitcoin’s gains came as outflows from the Grayscale Bitcoin Trust (GBTC) continued to decline, with more flows heading into the newly approved spot ETFs.
GBTC recorded the lowest outflows since its transformation into a spot ETF, with about $52 million on Monday. Last week, the new Exchange Traded Funds recorded net flows of more than $1.1 billion, with net inflows of $2.8 billion since their launch about a month ago, according to data provided by CoinShares.
The gains in the crypto market led to the launch of a large wave of liquidation of short positions. According to data provided by CoinGlass, the equivalent of $134 million worth of short positions were liquidated at the start of the week, which is the highest level in more than a month. Bitcoin had the largest share, with a value of more than $60 million worth of positions.
In contrast, only about $65 million, with $20 million for Bitcoin alone, were liquidated from long positions, even with this week’s record gains.
Focus shifting to Bitcoin halving event
“I believe that these liquidated long positions, whether profit-taking or stop losses of short positions, are relatively small given what we have witnessed over the past two months when Bitcoin tried to breach even lower levels,” said Samer Hasn, an analyst with the research team at XS.com in Dubai. “It seems that bulls today are more committed to their positions, with the outflows from GBTC calming down and gradually heading maybe towards zero, which was one of the most prominent obstacles to further progress since the launch of the spot ETFs. This is what we will continue to monitor over the coming weeks, as the focus gradually shifts towards the halving event expected during the second quarter.”
XS.com said it was also about to execute $890 million worth of Bitcoin options, with a call option ratio of 0.8 to put options, while $87 million worth of call options have an execution price of $50,000 per Bitcoin, according to Deribit.
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Bitcoin mania boosts Coinbase stock price in New York
Bitcoin’s remarkable upward momentum had an immediate impact on Coinbase NASDAQ:COIN, the first cryptocurrency-related company to list on the NYSE. Coinbase experienced growth of more than 3.5%, reaching the $150.00 USD per share zone. It is important to note that about a year ago, the company’s shares were around $55.00 USD, which represents a growth of about 170% in one year.
It is not only thanks to Bitcoin that Coinbase has experienced this remarkable rise. The recent launch of spot Bitcoin ETFs in the United States has generated intense competition among the major cryptocurrency exchanges. In this context, Coinbase has emerged as a crucial player by being selected as custodian for eight of the eleven ETFs issued.
Among the firms that have opted for Coinbase are Bitwise, Ark Invest, WisdomTree, Invesco, Valkyrie, BlackRock, Franklin Templeton and Grayscale. Only Fidelity, VanEck and Hashdex have chosen other custodians to safeguard their BTC. By leading as custodian for the majority of spot BTC ETFs, Coinbase could exert an even more significant influence on market dynamics.
But eyes will continue to be on Coinbase this week, as the cryptocurrency exchange platform will release its quarterly report for the fourth quarter of 2023 on Thursday, February 15, 2024. Analysts are projecting EPS of 0.044 and revenue of $826.69 million.
In addition to Coinbase, other digital-related companies experienced significant upward movements. Marathon Digital Holdings Inc, a company focused on digital asset technology and the blockchain ecosystem, recorded a 14% increase, taking the price to the $27.20 per share.
Similarly, Nasdaq-listed MicroStrategy Incorporated NASDAQ:MSTR saw an increase of 11%, taking its price to the $715.00 per share zone.
It is crucial to note that these remarkable movements in the aforementioned companies have been influenced by both the rise of Bitcoin and the authorization of ETFs approved by the SEC in January 2024. This authorization has opened the doors for major institutions to enter the world of cryptocurrencies, which has contributed significantly to the growth of BTC and boosted everything related to it.
Sentiment in Bitcoin and Ether diverging
The SERIX sentiment for Bitcoin continued an upward trajectory which it started in November last year, reaching 109 points in January 2024, according to pan-European trading venue Spectrum Markets. Conversely, the Ether (ETH) SERIX sentiment index followed a divergent path during the same period, declining to 103 points.
A similar decision on the prospects for the approval of spot Ether ETFs in the US is still uncertain. Following the original BTC announcement from the SEC, Bitcoin-related trading on Spectrum surged to 2.5 times the monthly average in 2023.
The SERIX value indicates retail investor sentiment, with a number above 100 marking bullish sentiment, and a number below 100 indicating bearish sentiment, which means that both SERIX sentiment indices on cryptocurrencies are still bullish, but with different tendencies.
“Spectrum experienced a spike in activity on products linked to Bitcoin in the hours following the SEC’s decision to approve the first Bitcoin ETF, as retail investors took advantage of our 24-hour trading to quickly respond to the anticipated news, within a regulated environment,” explained Michael Hall, Head of Distribution at Spectrum Markets.
Spectrum said it supported the SEC’s decision, as enabling US investors to access Bitcoin via a highly-regulated and transparent wrapper like an ETF, addresses the growing demand for enhanced regulatory standards around the world on the asset class.
Meanwhile, in the EU, a Bitcoin ETF is still not possible under existing regulation as UCITS regulations do not allow a single reference price for an ETF underlying. “To stay competitive with the US, EU rules must be adjusted in order to prevent the diversion of flows, executed in Europe, abroad,” said Hall.
