1. Market Wrap: Bitcoin Holds Above $60K as Crypto Market Cap Reaches New High
Meanwhile, some analysts are warning about overheating in the futures market given the recent rise in leveraged positions
Bitcoin rose toward $62,000 as the first U.S. futures-based bitcoin exchange-traded product (ETF) was set to go live this week. The world’s largest cryptocurrency by market capitalization was up about 2% over the past 24 hours as the total crypto market cap reached an all-time high near $2.5 trillion on Monday.
Most of the price rally was attributed to the U.S. Securities and Exchange Commission’s (SEC) approval of the ProShares Bitcoin Strategy ETF on Friday, which will start trading on the New York Stock Exchange tomorrow. Bitcoin rallied about 30% over the month as bullish sentiment improved ahead of the bitcoin futures ETF announcement.
“An Ethereum ETF will likely follow soon after as CME [Chicago Mercantile Exchange] already offers Ethereum futures contracts,” crypto trading firm QCP Capital wrote in a Telegram announcement.
“A lot of good news has already been priced in, although with bitcoin’s all-time high just $3K away, a fresh attempt to break this is very likely to happen in the short term,” Nicholas Cawley, analyst at DailyFX.
Technical charts show strong price resistance around the $63,000 BTC all-time high reached in April, which could cap upside moves over the short term. Indicators also show price is the most overbought since July, which preceded a near 10% pullback.
Bitcoin (BTC): $61,450, +1.6%
Ether (ETH): $3,747, +0.3%
S&P 500: +0.3%
10-year U.S. Treasury yield closed at 1.585%, +0.011 percentage point
Crypto market cap near $2.5 trillion
The total cryptocurrency market capitalization reached an all-time high on Monday, just shy of $2.5 trillion. The previous attempt at an all-time high was in May, which preceded a sell-off in cryptocurrencies. However, the total crypto market cap remained above $1 trillion as the sell-off stabilized in July.
Overheated futures market
The amount of money locked in the bitcoin futures contracts on the global derivatives giant CME surged to record highs on Friday as the SEC gave the green light to futures-based ETFs tied to the cryptocurrency.
The chart below shows that the dollar value of open interest (OI) — or the number of futures contracts traded but not liquidated with an offsetting position — stood at $3.64 billion on Friday, more than doubling the total for the month, according to data provided by bybt. The previous lifetime high of $3.26 billion was recorded during the bull market frenzy in February.
Some analysts warned about overheating in the futures market given the recent rise in leveraged positions.
“Today’s volatility seems to be driven by a high-leveraged future market,” CryptoQuant wrote in a blog post published on Monday. “The strongest support levels (based on UTXO price distribution histogram) are [$]54K, [$]56K BTC,” the firm wrote.
2. Grayscale Files With SEC to Convert Its Bitcoin Trust Into an ETF
The Grayscale Bitcoin Trust is the largest bitcoin investment vehicle in the world.
Grayscale Investments, the world’s largest digital currency asset manager, has filed with the Securities and Exchange Commission to convert its Grayscale Bitcoin Trust (GBTC) into a bitcoin spot ETF, the company announced in a press release Tuesday.
The move comes just after the SEC cleared the way on Friday for bitcoin futures ETFs to trade, with ProShares Bitcoin Strategy ETF scheduled to start trading on the NYSE on Tuesday.
GBTC first launched in 2013 and has become the largest bitcoin investment vehicle in the world, with assets under management of close to $40 billion. It holds roughly 3.44% of all bitcoin in circulation, according to Grayscale.
Grayscale has talked repeatedly about its plans to convert GBTC, as well as its 14 other crypto trusts, into ETFs.
Grayscale’s ETF would be backed by actual units of the cryptocurrency, not simply linked to it via derivatives contracts such as futures. Should the proposal gain approval, it would be a further expansion of the leading cryptocurrency as a recognized investible asset.
Some analysts feel the likelihood of Grayscale getting approval of a bitcoin spot ETF anytime soon are slim, given SEC chair Gary Gensler’s often-stated preference for a futures product that might confer more investor protections.
The SEC will now have 75 days to review Grayscale’s application.
3. VC Firms Variant Fund, Atelier Ventures Merge to Focus on the ‘Ownership Economy’
The combined firm is launching a $110 million first-check fund to invest in user-owned products and services.
Variant Fund and Atelier Ventures, firms founded by Andressen Horowitz (a16z) veterans, are merging and launching a $110 million first-check fund to invest in the “ownership economy,” or products and services that are built, owned and operated by their users. The combined firm will be known as Variant.
Jesse Walden, who focused on blockchain investments at a16z, launched Variant Fund last year with the ownership economy in mind. Around the same time, Li Jin left a16z’s consumer team to found Atelier Ventures to target new platforms that enabled users to “monetize individuality” in a so-called “passion economy.” Last month, The New York Times called Jin “the investor guru for online creators.”
“Both of our funds are notably different in a sea of venture firms: they exist not just out of a desire for financial returns, but to support companies that catalyze greater social and economic equality,” Jin wrote in her personal blog post announcing the merger and the new fund. “Our missions were, and are, two sides of the same coin: ownership is a cornerstone of financial freedom and enables greater enfranchisement of participants in the networks to which they contribute their time and energy.”
4. Bitcoin Hits 6-Month High as First Bitcoin Futures ETF ‘BITO’ Starts Trading
The ProShares Bitcoin Strategy exchange-traded fund started with $20 million of seed capital.
Bitcoin’s price surged Tuesday to a six-month high, climbing past $63,000 as ProShares’ much anticipated exchange-traded fund (ETF) began trading on the New York Stock Exchange (NYSE).
The largest cryptocurrency has climbed 33% over the past month on expectations that the U.S. Securities and Exchange Commission (SEC) would approve the exchange-traded fund investing in futures contracts tied to the cryptocurrency.
The ProShares Bitcoin Strategy ETF started trading at 9:30 a.m. ET as the bell rang to open the day’s session on the NYSE. The stock ticker is $BITO.
The first of its kind, the ETF offers investors the opportunity to gain exposure to returns of BTC with the ease of buying a stock in a brokerage account. The SEC approved the ETF on Friday, and several other pending ETF proposals could win approval later this week.
The big question for cryptocurrency traders is how much additional upward price pressure might come from the debut of the new ETF.
The ProShares ETF is structured to invest in bitcoin futures contracts traded on the Chicago-based CME, rather than investing in the cryptocurrency directly. So the ETF by itself won’t introduce any new demand for bitcoin, but traders might buy more bitcoin as they look to hedge against the futures price or take advantage of pricing disparities.
5. Australia Has Third Highest Rate of Crypto Adoption in the World: Finder Survey
Finder’s survey found Australia has the third-highest rate of crypto ownership above 17%.
Australia is more bullish on cryptocurrencies than most other countries around the world, according to a survey published by comparison site Finder on Sunday.
The survey, based on the site’s Cryptocurrency Adoption Index, measures the growth of crypto globally through a regular survey of over 41,600 individuals across 22 countries.
Finder’s survey found Australia has the third-highest rate of crypto ownership at 17.8%, beating out countries such as Indonesia (16.7%) and the city of Hong Kong, a special administrative region of China (15.8%).
The global average is around 11.4%, according to Finder’s results.
“Australian’s love to gamble,” Fred Schebesta, CEO of Finder, told CoinDesk via Signal on Monday. “They are also super savvy in terms of finance … the laws around crypto make it super smooth to buy and sell.”
Of the nearly 1 in 5 adults in Australia who own some form of crypto, Finder found bitcoin is the most popular coin for with 65.2% of Australian’s owning the world’s largest crypto, the fifth-highest percentage of all 22 countries surveyed.
Ethereum, meanwhile, is the second most popular coin within the island nation with a share of 42.1% while cardano’s share comes in third at 26.4%.
Two other cryptos Australian crypto owners currently hold are dogecoin and binance coin which stand at 23% and 14.6% respectively, according to Finder’s results.
“Banking in Australia is really smooth and super easy to withdraw and deposit,” Schebesta added. “Other countries have a lot more laws and challenges around getting your money in and out [of crypto].”
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October 19, 2021