Xcoins™ Official

September 4, 2023

Bitcoin Has Rollercoaster Week as Spot ETF Decision Delayed

September 4, 2023

In a dynamic week for the cryptocurrency industry, Grayscale Investments, a prominent crypto asset manager, clinched a crucial legal victory against the United States Securities and Exchange Commission (SEC), rekindling hopes for a listed Bitcoin exchange-traded fund (ETF). 

However, this triumph coincided with the SEC’s decision to delay judgments on several spot Bitcoin ETF applications, leaving market observers on edge. 

Meanwhile, Bitcoin whales have demonstrated unwavering confidence, accumulating a staggering $1.5 billion worth of BTC, while Bitcoin and Ethereum are on track to mark their lowest quarterly volumes in years. 

  • Grayscale victory spurs hope amidst SEC delay on Spot Bitcoin ETFs
  • Bitcoin whales scoop up $1.5 billion worth of BTC
  • Bitcoin and Ethereum trading volumes are on track to match lowest quarter on record

Grayscale victory spurs hope amidst SEC delay on Spot Bitcoin ETFs

In a whirlwind of developments in the cryptocurrency world, Grayscale Investments has secured a significant legal victory against the United States Securities and Exchange Commission (SEC), reigniting hopes for a listed Bitcoin exchange-traded fund (ETF). 

However, this triumph for Grayscale came days before a postponement by the SEC in its decision on several spot Bitcoin ETF applications.

Crypto asset manager Grayscale Investments has been ardently pursuing the transformation of its over-the-counter Grayscale Bitcoin Trust (GBTC) into a listed Bitcoin exchange-traded fund (ETF) for several years. 

The SEC had previously rejected Grayscale’s GBTC application, citing concerns that the products did not have adequate safeguards against fraudulent activities and market manipulation.

Undeterred, Grayscale took legal action, filing a petition for review with the United States Court of Appeals for the District of Columbia Circuit. 

On August 29, 2023, Grayscale’s CEO Michael Sonnenshein announced on X (formerly Twitter) that the U.S. Court of Appeals Circuit Judge Neomi Rao handed down a crucial decision, ordering the review petition to be granted and the SEC’s order to deny the GBTC listing application to be vacated. 

Tweet from Grayscale’s CEO, Michael Sonnenshein

Renewed by fresh optimism Bitcoin’s price surged to a weekly high of $28,800. 

However, prices were quickly dashed when on Thursday the SEC delayed decisions on six applications for other Spot Bitcoin ETFs. 

WisdomTree, Invesco Galaxy, Valkyrie, VanEck, Bitwise Asset Management, and Fidelity have all seen their proposals put on hold.

This delay is primarily due to the SEC designating a longer review period, following which it will have an additional 45 days, ending in October, to decide on proposed rule changes allowing the listing of these investment vehicles. 

In addition to the mentioned firms, a multitude of others have crypto ETF applications awaiting SEC review, including BlackRock and ARK Invest. 

After news of the ETF delays was confirmed, Bitcoin’s price crashed back down to a weekly low of $25,300, where prices have remained throughout the weekend.

The cryptocurrency industry is now keeping a close eye on all ETF developments, as investors eagerly await the SEC’s decisions on the pending applications. 

Meanwhile, Grayscale’s legal victory has given fresh hope to those advocating for a spot Bitcoin ETF, demonstrating that the regulatory landscape is continually evolving in the crypto world.

1D BTC/USD price chart
1D BTC/USD price chart

Bitcoin whales scoop up $1.5 billion worth of BTC

In a remarkable display of resilience, major Bitcoin (BTC) investors, often referred to as “whales,” have continued to accumulate substantial BTC holdings, even in the face of recent price fluctuations. 

Insights from crypto analytics firm IntoTheBlock reveal that wallet addresses holding a minimum of 0.1% of the total Bitcoin supply, which equates to over $500 million in value, augmented their holdings by an impressive $1.5 billion during the last two weeks of August.

This surge in accumulation is all the more intriguing considering the near absence of BTC inflows into centralized exchanges during this period. 

Lucas Outumuro, the Head of Research at IntoTheBlock, suggests that this signals “organic buying demand rather than just funds shifting to exchange addresses.”

The actions of these whales, who wield considerable influence over digital asset markets, are closely monitored by crypto enthusiasts as they often foreshadow significant market movements.

Their decision to accumulate BTC has occurred against the backdrop of a temporary slump in BTC’s price, dropping to a two-month low. A dip that was only briefly interrupted by a pivotal court decision relating to Grayscale’s efforts to establish a spot Bitcoin exchange-traded fund (ETF) in the United States.

The whale accumulation spree commenced after August 17 when BTC experienced a significant 10% drop, falling below the $26,000 mark, marking its lowest price since June, according to IntoTheBlock’s data. 

However, the accumulation trend among large BTC holders conveys a promising message. 

Lucas Outumuro remarks that “institutional investors are becoming increasingly optimistic about Bitcoin as we approach pivotal ETF decisions.” 

This sentiment suggests that, despite short-term market turbulence, confidence in Bitcoin’s long-term potential remains robust among institutional players.

Netflow of large Bitcoin holders
Netflow of large Bitcoin holders 

Lowest quarterly trading volumes on track for Q3?

According to the latest data collated by CoinGecko, Bitcoin, the cryptocurrency pioneer, and Ethereum, its foremost challenger, are facing a notable decline in spot trading volumes for the current quarter.

Bitcoin, often regarded as the bellwether of the cryptocurrency market, has seen its spot trading volumes for the current quarter amount to $721.10 billion. 

However, by extrapolating the data trends from July and August into September, it becomes evident that Q3 2023 might provide the lowest trading volumes for a quarter since the first quarter of 2019.

The previous two months showcased trading volumes of $345.89 billion and $354.84 billion, respectively. Should these conditions persist, and September’s volumes remain around $350 billion, the total quarterly trading volume for Bitcoin is poised to approach $1.05 trillion.

For perspective, the previous quarter recorded total quarterly trading volumes of $1.25 trillion, marking a potential 14% decline quarter-over-quarter. 

Bitcoin quarterly trading volume, Data collected from CoinGecko.
Bitcoin quarterly trading volume, Data collected from CoinGecko.

Meanwhile, Ethereum, often referred to as Bitcoin’s closest rival, is experiencing a parallel narrative. 

In July and August, ETH registered trading volumes of $232.06 billion and $212.92 billion, respectively. Should Ethereum’s September trading volumes reach approximately $220 billion, the cumulative quarterly trading volume for ETH would reach the $650 billion mark, a level unseen since 2019.

This decline in spot trading volumes isn’t isolated to Bitcoin and Ethereum alone. 

According to a previous CoinGecko report, spot trading volumes for the entire cryptocurrency market on centralized exchanges plummeted by 43% in the second quarter of 2023.

Institutional trading firm Genesis Trading has weighed in on this trend, asserting in its last quarter report that it will be derivatives that will likely play a pivotal role in the future growth of cryptocurrency volumes. 

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