Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
GBTC’s discount reaches lowest since 2021 as institutional demand grows
Based on IntoTheBlock’s weekly newsletter. If you enjoy it, and would like to receive it every Friday make sure to sign up here!
This week we dive into the court’s ruling in favor of Grayscale. We evaluate the outperformance of GBTC, on-chain data revealing how Bitcoin institutional investors are positioning and the growth in retail holders.
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
- Network fees for both Bitcoin and Ethereum dropped to their lowest in two months as on-chain activity faded in spite of the GBTC news
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
- Bitcoin recorded modest inflows into CEXs of just $5M this week, and $170M in net outflows throughout August
- Ether continues to record larger outflows, with $380M leaving CEXs this week and a approximately $1.5M this month
Grayscale Wins & Whales Accumulate
In June 2022, Grayscale sued the SEC after being rejected to turn its GBTC fund into an ETF. Over a year later, this week the US courts ruled 3–0 against the SEC’s decision, deeming it “arbitrary and capricious”. The ruling in favor of Grayscale, led GBTC to rally — and briefly the rest of the market too.
Via ITB’s Free Capital Markets Analytics
Narrowing Discount — The price of GBTC relative to its Bitcoin holdings has been increasing in 2023
- The value of GBTC has increased 125% this year, more than double than Bitcoin’s 62% rise
- After winning the court case, GBTC’s discount has narrowed to 18% its lowest since December 2021
- The narrowing discount suggests the market is placing higher odds on Grayscale’s transition to an ETF going through, which would enable users to withdraw their BTC at par and thus arbitrage the discount down to 0
GBTC’s conversion into an ETF has not been approved yet, but there are signs that institutional investors are getting optimistic in Bitcoin as ETF decisions approach.
Via ITB’s Bitcoin Concentration Indicators
$1.5B Accumulation — Addresses holding 0.1% of the Bitcoin supply or more have added over a billion and a half in BTC holdings in the last two weeks
- An initial spike in accumulation of 24k BTC took place after the drop to $25k, was followed by another increase in August 23 and then one of 20k BTC the day of the Grayscale ruling
- Comparing this to Bitcoin CEX netflows, which have been close to $0 as previously discussed, suggests that there is organic buying demand rather than just funds moving to exchange addresses
It’s not just large investors that appear to be buying Bitcoin, the broader market also appears to be growing on-chain.
Via ITB’s Bitcoin Ownership Indicators
Record High Holders — The number of addresses holding Bitcoin has reached over 48 million for the first time
- After dropping slightly in July, the number of addresses holding Bitcoin broke a new high this week
- Many of these new addresses seem to be from retail investors, since the number of addresses with less than 1 BTC but more than 0.001 BTC (~$26) reached a new high of nearly 23 million
Although the court’s decision in favor of Grayscale appears to be bullish for the GBTC premium, Bitcoin prices are back to where they were roughly prior to the ruling. This casts some doubts about where Bitcoin’s price may be going next, but institutional holders’ accumulation suggest they are optimistic.
Grayscale Wins & Whales Accumulate was originally published in IntoTheBlock on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.