Bitcoin's ETF blues

January 15, 2024

 

Reading time: 7 minutes

Miners' pre-approval sell-off proves wise as Bitcoin declines by 7% with ETF trading commencement 

Key points:

  • The on-chain trading volume share of Bitcoin miners sharply surged in the days before ETF approvals, reaching its highest level in over four years

  • The Hashprice, a key indicator of miners' profitability, witnessed a notable decline in tandem with the drop in Bitcoin prices following the approval of ETFs, as indicated by HashRate Index data

News - Bitcoin experienced a significant drop, declining by 7%, just two days after the official approval of spot ETFs for trading. Over the weekend, the cryptocurrency hovered around the $42,000 mark, according to data from CoinMarketCap.

What triggered the slump? The downward pressure on Bitcoin was mainly triggered by withdrawals from the Grayscale Bitcoin Trust (GBTC). The fund transitioned into a spot ETF, enabling the release of previously locked-up Bitcoin that were held indefinitely in the prior structure.

Were holders expecting this? Well, it appears that a certain group of Bitcoin holders might have anticipated this pullback. Leading up to ETF approvals, on-chain analytics firm IntoTheBlock noted a significant rise in Bitcoin miners' on-chain trading volume share. In fact, on 10 January, a day before the approvals, the number of Bitcoin transferred by miners to exchanges reached a five-month high.

In this scenario, it is important to remember that miners regularly liquidate holdings to cover the costs of their mining infrastructure, especially when BTC is on an upward trajectory. With BTC gaining 60% in the three months leading to the approvals, miners likely foresaw a potential pullback and strategically chose to secure profits in advance. In hindsight, their decision to liquidate seems well-considered.

GameStop announces closure of NFT marketplace amid regulatory uncertainties

Key points:

  • Starting 2 February 2024, customers will no longer have the option to buy, sell, or create NFTs on GameStop

  • While the company is reducing its involvement with cryptocurrency, it assured users that their NFTs, stored on the blockchain, will remain accessible and saleable through other platforms

News - GameStop, the gaming retailer, is set to shut down its nonfungible token (NFT) marketplace next month. Users have slightly over two weeks left to utilize the NFT platform, according to an announcement on GameStop's website.

Why was this decision taken? Citing the ongoing regulatory uncertainties in the crypto space, the company attributed the decision to a lack of clear regulations.

Notably, this move comes after a series of reductions in GameStop's crypto offerings. In August 2023, customers were advised to secure their "Secret PassPhrase" before the discontinuation of access to iOS and Chrome Extension wallets. Additionally, in December 2022, GameStop shifted its focus away from crypto following a $94.7 million net loss in Q3. 

In line with this, GameStop CEO Matt Furlong clarified that although the company is optimistic about crypto, he aims to prevent risking investor funds any further. 

Is there hope after all? Certainly, there is hope. Amid calls for clearer regulations from crypto leaders, the recent approval of 11 spot Bitcoin ETFs by the U.S. SEC signaled a positive shift, indicating an increased willingness to address regulatory concerns in the crypto sector.

Ethereum records double-digit growth, sustains positive sentiment amid market chaos

Key points:

  • Surprisingly, even with the rise in bullish sentiment, ETH's social volume experienced a decline

  • AMBCrypto's analysis revealed that if the bull’s rally continues, ETH may encounter strong resistance near $2,740 mark, given a historical spike in liquidation at that level

News - The approval of Bitcoin's spot ETF created chaos in the cryptocurrency market, leading to a decline in the prices of most coins. Despite this, Ethereum took a different path, recording a double-digit growth over the past week.

Week's highlights - As per CoinMarketCap, Ethereum witnessed a surge of over 14% in the past week. At press time, ETH was trading at $2,525, boasting a market capitalization exceeding $303 billion. Additionally, sentiment surrounding the token had also shifted positively.

On 13 January, Santiment reported that the sentiment toward top-tier assets, particularly Ethereum remained exceptionally positive. An analysis by AMBCrypto supported this observation, indicating a significant surge in Ethereum's Weighted Sentiment last week, signaling a prevalent bullish outlook.

Additionally, ETH's Exchange Supply had recently dropped below its Non-Exchange Supply, indicating increased buying pressure on the token. Furthermore, the confidence of large holders, or whales, in the token saw a modest increase as the supply held by top addresses saw a slight uptick last week.

South Korea explores U.S. model for crypto mixers, discusses possible sanctions

Key points:

  • South Korean financial regulators are reportedly planning to regulate the use of crypto mixers, following the lead of the United States

  • In August 2022, the U.S. Treasury Department imposed the first sanctions, targeting Tornado Cash, a popular crypto-mixing service

News - South Korea's financial regulator, the Financial Intelligence Unit (FIU), is reportedly working on legislation for the regulation of crypto-mixing services, aligning with approaches seen in the United States.

As per a report by a local publication, the discussions have just recently begun, indicating that it might take a while before they are implemented.

Is there any official confirmation?  A FIU official shared that discussions in South Korea arose following U.S. sanctions on crypto mixers. The official also mentioned that talks about new regulations are in the early stages, with the U.S. actively participating in the dialogue.

Why is this needed though? Cryptocurrency mixing services were initially designed for privacy, allowing a sender to conceal their key details by mixing potentially identifiable or "tainted" cryptocurrency funds with others. However, over time, these services have become a widely used method for scammers and hackers to legitimize unlawfully acquired funds.

Did you know?

  • The smallest unit of Bitcoin is called a "satoshi," which is equal to 0.00000001 BTC. This is named after Satoshi Nakamoto, the pseudonymous creator of Bitcoin.

  • Vitalik Buterin founded Ethereum in 2013. Faced with financial challenges, Buterin opted for crowdfunding. The campaign, held in July and August 2014, successfully funded Ethereum's development, leading to its launch on 30 July 2015.

  • It's commonly believed that crypto transactions are anonymous, but in reality, they are pseudonymous. While sender and receiver identities are challenging to trace, transaction details can be obtained through data analysis of associated public wallet addresses.

Top 3 coins of the day

Cardano (ADA) 

  • Despite a general rally in the altcoin market following the recent ETF approval, ADA remains burdened by negative sentiment

  • The key momentum indicators for ADA have been on a downward trend since the beginning of the year, suggesting a decline in accumulation

What you should know - Over the past week, ADA gained by 7.3%. At the time of writing, the crypto was changing hands at 0.53, after falling by 1.6% in the last 24 hours. ADA could face resistance at the $0.58 mark next, which has historically seen a concentration of selling pressure. Breaking this may lead to a test at the $0.60 level, signaling a shift in sentiment and a potential uptrend. Meanwhile, support is evident at the $0.55 mark and the RSI near the midpoint indicated a balance between the buyers and sellers.

Polkadot (DOT)

  • In its 2023 Q4 report published on 12 January, DOT disclosed that almost 100 million tokens were unlocked at the beginning of the quarter, resulting in the staked token count rising from 673 million to 709 million DOT by November 2023

  • As per Token Terminal's data, Polkadot's daily active addresses and fees remained high throughout the last week, indicating high network activity

What you should know - On 11 January, DOT successfully surpassed a crucial bearish trend line, with resistance around the $7.80 mark. At press time, DOT was trading at $7.58, after experiencing a 0.1% increase in the last 24 hours. The RSI was seen just below the 50-mark to denote some weak bearish momentum. The next major resistance at the $8.88 mark could fuel a strong rally upon a successful breakthrough. Conversely, a failure to initiate an upward trend may result in a decline, with initial support at the $7.50 mark and potential further drop to $7.00.

  • LINK’s price has been consolidating between key support $13 and stiff resistance $17 since November

  • A break above the sideways structure could propel LINK to challenge multi-month resistance at the $17 level

What you should know - For the last 7 days, LINK has been in a good upward trend, thus increasing by 16.4%. In the past 24 hours, the crypto increased by 4.0%, reaching a press time value of $15.66. The Fear & Greed Index displayed a score of 72 (Greed), suggesting that investors were exhibiting high levels of optimism in the current market conditions. The Awesome Oscillator appeared to confirm this trend, displaying several green bars below the half-line, signaling growing bullish momentum.

How was today's newsletter?

Login or Subscribe to participate in polls.