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This week we evaluate what the market is telling us in anticipation of a potential Bitcoin ETF being approved. We review GBTC's performance, signals coming from futures markets, the bullish reaction to the Ripple hearing and on-chain momentum forming within the crypto market.
Network Fees - Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether
Bitcoin fees dropped to their lowest since March, despite transaction activity rebounding
ETH fees dropped slightly compared to the previous week, though they accelerated sharply on Thursday afternoon
Exchanges Netflows - The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
Bitcoin and Ether recorded negligible outflows from CEXs
Analyzing Bitcoin's ETF Odds
30 days after Blackrock's filing for a spot Bitcoin ETF, sentiment has shifted dramatically in the crypto space. Bitcoin and Ether prices are up 22% and 15% respectively, while many altcoins are up significantly more following Ripple's win against the SEC.
With the market outlook taking such a u-turn within the month since Blackrock's ETF application, it's worth reviewing its status and what odds the market is giving a potential approval. A great point to start is by looking at GBTC's price action.
GBTC Discount Reaches Yearly Lows - The discount of Grayscale's Bitcoin Trust reached the lowest it has been since May 2022
GBTC's price is up by 60% over the past 30 days, compared to Bitcoin's 22%
The GBTC discount has recovered from -50% in December to -26% currently
GBTC's outperformance since the Blackrock application is likely a signal that the market not only believes that its ETF will pass, but also that GBTC has decent odds at winning its case allowing it to convert into an ETF
Following the Ripple news on Thursday, the GBTC discount narrowed even further, potentially suggesting that the market is betting on the SEC easing off its pressure against crypto after losing their securities case with Ripple
This has led to positive sentiment for crypto in the US growing, as echoed by futures market data.
Blog: The Hidden Hands and Pitfalls in Governance
Cryptocurrency protocols currently face an urgent need for reform. Despite their promise, many popular designs and incentive mechanisms within crypto protocol governance exhibit a narrow focus and lack transparency. This complexity often leads to voter apathy, resulting in a low turnout that lets small groups dictate the protocol's direction.
The CME Premium - Since Blackrock's filing, the price of Bitcoin futures on the CME has been consistently higher than on international futures exchanges
All major futures contracts expiring at the end of the quarter are currently in contango, being priced at a premium relative to spot markets
This premium has also been increasing (typically it reduces as the expiration date approaches), showing strong optimism in the market
The CME's premium accelerated sharply on Thursday, suggesting that American investors were particularly bullish following the Ripple ruling
This sentiment is also being reflected on-chain, where momentum has shifted to the bulls.
Only 20% of BTC Holders Losing Money - Just about 1/5th of Bitcoin holders are currently losing on their positions
This percentage is the lowest since April 2022, when Bitcoin was at $44,000
Since then the number of addresses profiting has grown by over 5 million, showing that many addresses were eager to double down on Bitcoin below $30,000
The total number of Bitcoin holders has also grown since the Blackrock ETF application, suggesting more are looking to accumulate prior to a potential launch
We should be finding out by September 2nd whether the SEC decides to accept, reject or postpone their decision regarding Blackrock's Bitcoin spot ETF. It is also possible that Ark's Bitcoin ETF application gets approved earlier as its next decision deadline is on August 13. Though the final decision from the SEC remains uncertain, on-chain and markets data indicate that investors see high odds of the ETF being approved relatively soon.
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