Cryptocurrencies are levelling off today as the weekend approaches. Bitcoin is looking to be settling near the level of $26,000, as well as Ethereum at the level of $1650.
Uncertainty continues in the cryptocurrency markets as more signs are being sought about the future adoption of cryptocurrency technology as well as the future of the regulatory environment for this market, especially in the US.
Ethereum futures ETF application from Cathie Wood
Yesterday, we witnessed the announcement that the asset management firm Ark Invest, led by Cathie Wood, in cooperation with 21Shares, submitted an application to launch an Ethereum futures ETF, which will enable investors to benefit from changes in the prices of the second largest cryptocurrency without the need for direct possession of it.
“I believe that the growing momentum to launch more crypto-related financial products, such as Bitcoin spot or futures ETFs, reflects the growing interest and confidence of institutional investors in the future of this technology despite the legal and regulatory difficulties and the ongoing crisis of confidence,” said Samer Hasn, a market analyst with XS.com.
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Big increase in both Ethereum and Bitcoin wallet holdings
Also, yesterday we saw more reports about transactions across major Ethereum wallets. According to data provided by Sentiment, the number of wallets holding between 10 and 10,000 units of Ethereum has increased by 1,788 since the beginning of last June to reach 355,000 wallets. These numbers came in conjunction with huge inflows into major Bitcoin wallets, which added the equivalent of $308 million in Bitcoins only within several days.
These huge transactions may be attributed to the response to the recent declines in the price of Bitcoin and Ethereum last weekend, in addition to fears among investors about what regulators in the United States might do, which could lead to a further decline in confidence.
Also, according to Commitments of Traders (COT) reports from last week, the increase in the number of open interests and the percentage of long positions in Bitcoin futures contracts during the first half of this August may reflect the expected momentum of the cryptocurrency market as investors await further developments.
Low volatility and a Bitcoin flash crash
The nosedive in the Bitcoin price followed a two-month period of really low volatility, with BTC ranging for about 60 days on a $3,000 range price.
On the 16th of August, the annualised volatility of BTC measured on 30 days period, reached 16.29%. This is the lowest level ever recorded since BTC launch in 2009. Between the 17th and 18th of August the market fell, including a flash crash that caused a 10% decrease in price for BTC in just 1 hour. During the dip, BTC’s price decreased to $25,100, before recovering and holding up to the $26,000 price level.
The recent turmoil led BTC price to trading levels that mirror the ones preceding the Blackrock filing for their BTC Spot ETF. The fear-of-missing-out (FOMO) which lasted a few weeks after the filing seem to be now disappeared, waiting for news on the matter.
Remaining on the ETF digital asset market, the resolution of Grayscale versus SEC was postponed for a second time, surpassing the classic 160-day resolution deadline. Waiting for the decision, the Grayscale Bitcoin Trust (GBTC) discount narrowed down to less than 26%, the lowest value registered in the last 12 months. The discount was over 40% in July, and the strong narrowing of it shows how the perceived likelihood of an ETF Spot approval in the US in the future strongly increased, pushing investors to buy the GBTC at a strong discount, believing in a future ETF listing.
