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Fineqia International comments on digital asset flows and that news from the SEC 


Matteo Greco, Research Analyst at Fineqia International, has published a note on the latest developments in digital assets.

He writes that bitcoin (BTC) closed last week at about USD30,100, before breaking below the USD30,000 threshold overnight. In the last 15 days BTC price remained stable around USD30,000, with some intraday volatility but overall, with almost no variation in price in the last two weeks evaluating the closing price. 

After a big market bounce following the XRP ruling, digital assets found some price stability and investors are now waiting for the next FOMC meeting, scheduled for Wednesday this week, he says.

Investors’ expectations are a 100 per cent probability of a 25bps rate increase which is contributing to the pause in the current uptrend. The strong US jobs market still give space to the US central bank to increase interest rates, which are expected to increase two more times before the end of 2023 as they keep pursuing the trend of declining inflation.

During last week, the SEC officially accepted to review the applications to create BTC spot ETFs from six firms. The positive news on ETFs contributed to the strong decline in the discount applied to the Grayscale BTC Trust (GBTC) that reached 25 per cent, the lowest level since April 2022. GBTC is the biggest financial product that uses a digital asset as its underlying asset, with about USD 18.7 billion in asset under management. 

Greco writes that the increased likelihood of a spot ETF approval is leading to the narrowing the discount applied to the trust due to a rise in investors’ expectations of seeing the product finally converted in a spot ETF after years of failed attempts by Grayscale.

The positive expectations of investors can also be confirmed looking at long term holders. About 55 per cent of BTC supply hasn’t moved in the last two years, showing an increase in long term holders and decrease in short term speculation. Also, the amount of Ethereum (ETH) held on exchanges declined by 31 per cent since November 2022. In contrast, the amount of ETH being staked recently surpassed 20 per cent of the supply, currently sitting at 20.66 per cent and reaching a higher amount compared to the amount of ETH held on exchanges.

Greco says that despite a cautious attitude of investors in the short term, especially due to the rate hike expectations at the forthcoming FOMC meeting, the analysed metrics concerning BTC and ETH suggest a period of accumulation, with investors that are buying digital assets and holding for a long period looking for a price increase in the long run.

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