Last week, Bitcoin (BTC) closed at around $37,000, up 5.9% from the previous week’s closing value of $35,000. The week saw robust price action as we witnessed BTC fluctuate with consecutive daily price increases from Monday to Friday. The highest trading price was observed on Thursday and reached almost $38,000. After this peak, the price experienced a slight dip and stabilized around $37,000 from Friday until the end of the week.
The dominance of BTC, which measures Bitcoin’s market capitalization relative to the overall digital asset market, fell for the second week in a row, standing at around 52.3%. This represents a decline of 0.7% from the previous week, highlighting the continued spread of liquidity across more speculative assets – a hallmark of a phase where investors are expressing confidence in the market and engaging in riskier trades.
Trading activity has continued to rise, with daily cumulative volume on centralized exchanges, calculated on a seven-day moving average, reaching $31.4 billion. This figure, the highest since late March, reaffirms that the recent uptrend is driven by robust trading activity.
A notable aspect is the substantial involvement of the traditional financial sector in the recent upward trend. For the first time, BTC open interest on the Chicago Mercantile Exchange (CME) exceeded 100,000 contracts, surpassing Binance and becoming the leading venue for BTC open interest. This strong presence of traditional financial investors is also reflected in the decreasing discount of the Grayscale Bitcoin Trust (GBTC), currently at 10.3%, the lowest level since August 2021.
The increased traditional financial activity associated with BTC underlines the confidence that market investors currently have in a future adoption of BTC Spot ETF. It is important to note that the first final deadline for a decision from the SEC is scheduled for January 10, 2024, regarding the 21Shares BTC Spot application. Most likely, the SEC will make a final decision – approve or reject – and approve or reject all filings before this date, to prevent any issuer from gaining a first mover advantage. Additionally, there has been a continued flow of signups for spot ETFs for digital assets, with recent news revealing Blackrock’s entry for an ETH Spot ETF, following Grayscale’s decision to apply for the Ethereum Grayscale conversion Trust (ETHE) in an ETH Spot ETF. weeks ago.
The increase in pricing and trading activity, especially through traditional financial channels, coupled with the consistent decline in the GBTC discount and the notable net inflows observed in ETPs with digital assets as underlyings, indicates that market investors are taking their bets venture for approval. Gaining SEC approval would likely attract significant investment from the traditional financial world, creating a new influx of investors who could strengthen digital assets and elevate them to a more recognized asset class. Conversely, a rejection would likely trigger a short-term downturn given prevailing expectations in favor of approval and the subsequent positioning of market participants heavily influenced by this expectation.