Contents
In Short
Grayscale $400 Million BTC Sale Sinks Market. Last Friday, Grayscale Investments, the U.S. crypto asset manager and one of the largest in the world, transferred to its digital securities custodian Coinbase, nearly $400 million in Bitcoin (BTC), causing the price of this cryptocurrency to plummet, losing the $70,000 level.
Grayscale BTC Sale
Bitcoin price had reached $73,580.86 early Thursday, according to CoinGecko, after the U.S. Department of Labor reported inflation in that country still resists. After the news, the market decline in its price started. In fact, after Friday’s Grayscale settlements, BTC’s price continued its plunge, reaching $67,047.54. This trend continued over the weekend, eventually falling during this Sunday’s trading day to $64,998.94, although it is trading at $67,153.19, with a loss of 8.7% from its Thursday’s ATH. According to the professional cryptocurrency derivatives platform CoinGlass, which displays data from the cryptocurrency derivatives market, settlements over the past 24 hours have increased to $289,120,000.
However, we cannont blame everything on Grayscale’s sale of BTC, as there were also other settlements of close to $400 million in the cryptocurrency market, for a total of more than $800 million settled during the day on Friday. Notably, since the beginning of this year, when Grayscale received approval from the Securities and Exchange Commission (SEC) to convert Bitcoin Trust (GBTC) into a Bitcoin exchange-traded fund (ETF), that asset manager has been liquidating a large number of cryptocurrencies has caused pressure on the BTC market.
Halving profit taking and other Factors
Although the outflows from Grayscale’s bitcoin spot exchange-traded fund are seeing large liquidations due to profit-taking by investors choosing to redeem their holdings to withdraw their gains, the rest of the ETFs in the market are getting record inflows. However, some believe that after the rise that led BTC to reach new ATHs, we expected corrections caused by profit-taking, so this type of correction will likely happen more frequently as the price of Satoshi Nakamoto’s coin reaches new levels. The hopes of retail and wholesale investors focus on halving, which will impact market prices next April when miners’ rewards halve, and the scarcity of BTC will kick in.
On the other hand, with the price of BTC above $60,000, many HODLers are in their green zone, such as the case of El Salvador, which is the first country in the world to adopt Bitcoin as legal tender since June 9, 2021, which holds a significant amount of this cryptocurrency in its accounts. The president of El Salvador, Nayib Bukele, posted on his profile within the social network X (formerly Twitter), noting that they had moved a “large part” of their BTC to a cold wallet.
We've decided to transfer a big chunk of our #Bitcoin to a cold wallet, and store that cold wallet in a physical vault within our national territory.
— Nayib Bukele (@nayibbukele) March 14, 2024
You can call it our first #Bitcoin piggy bank 🇸🇻
It's not much, but it's honest work 😂 pic.twitter.com/dqzedykxT1
According to the screenshot shared by President Bukele, the cold wallet has 5,689 BTC, approximately $71,420.32, giving an approximate value of $406,359,129. In the BlockCypher blockchain explorer, it is evident that at the instant of writing this note, its value has decreased to $383,512,085.69. The previous balance of this cold wallet was 1,181 BTC, valued at $84,418,377.619. This increase in BTC position by El Salvador is evidence that many HODLers of this cryptocurrency and even retail and wholesale investors are increasing their holdings and exposure in said crypto asset ahead of halving.
Ethereum ETF
With the rise of HODLers and BTC investors, it is also worth noting what may happen with Ethereum, as spot Ethereum ETFs are pending approval by the SEC, which could trigger the price of this cryptocurrency. With Ethereum ether (ETH) trading at the time of this writing at $3,630.19, with a market cap of $433,208,468,918 and volume traded in the last 24 hours of $21,263,828,763, according to CoinGecko, Grayscale is rubbing its hands together in anticipation of SEC approval of the conversion of its Ethereum Trust into an ETF.
Grayscale amended its filing, submitted to the SEC, to strengthen the arguments regarding shared surveillance within the CME ETH market, explaining that it is sufficient to protect against fraud and manipulation in the ETH spot market. To that end, in this past, Friday’s amendment, Grayscale included a correlation analysis performed by Coinbase as evidence of sufficient market correlation, which demonstrates that the CME ETH futures market has been “consistently and highly correlated” with the Ethereum spot market for virtually the past three years.
Ethereum and the SEC
Grayscale’s CLO, Craig Salm, was emphatic in acknowledging the changes to the filing delivered to the regulator to improve it, as he noted in a message on social network X: “We just submitted @Grayscale amended Ethereum Trust Form 19b-4. This action is an important step in our effort to list $ETHE on NYSE Arca.” He added: “Investors want and deserve access to #Ethereum in the form of an Ethereum spot ETF, and we believe the case is as strong as it was for #Bitcoin spot ETFs,” a comment he made to support Paul Grewal, Coinbase’s chief legal officer, who the day before had expressed his rejection of pressure from U.S. senators on the SEC not to approve the Ethereum ETF.
Democratic Senators John Francis “Jack” Reed of Rhode Island and Laphonza Romanique Butler of California, in a letter addressed to SEC Chairman Gary Gensler, urged the agency not to approve other cryptocurrency ETFs and that such financial instruments be correctly called ETPs.