Matteo Greco, Research Analyst at the digital asset and fintech investment business Fineqia International has written a note on the recent BTC price surge.
Bitcoin (BTC) closed the previous week at around USD28,000, marking a substantial 6.7 per cent increase compared to its closing value of USD26,250 in the preceding week. BTC’s price action displayed strong momentum throughout the week, particularly noticeable on Thursday when it surged to USD27,000, Greco writes. It then consolidated around this level for the next two days before embarking on a new uptrend, ultimately concluding the week at USD28,000.
Notably, September saw BTC registering a 4 per cent price increase, marking the first September price rise since 2016. Greco writes that this welcome development provided respite for the digital asset market capitalisation, following two consecutive negative months in July and August.
Bitcoin leads the charge in this upward trajectory, as evidenced by the bitcoin dominance metric, which measures the relationship between bitcoin’s market capitalisation and the total digital asset market capitalisation. Bitcoin dominance rose to 50.4 per cent, up from 49.9 per cent at the end of the previous week, showcasing its relative strength in comparison to the broader digital asset market.
Despite the encouraging price movements, trading volumes remain notably subdued, Greco says. Daily trading volumes on centralised exchanges, measured over a seven-day span, continue to display limited activity, with the cumulative trading volume over the past week hovering around USD10.5 billion, closely mirroring the figures recorded seven days earlier. On a monthly basis, trading volumes on centralized exchanges amounted to approximately USD312 billion in September, reflecting a 26 per cent decline compared to the USD423 billion observed in August.
Low volumes typically coincide with reduced market volatility. This connection is corroborated when examining BTC’s 30-day volatility, which has declined to approximately 23 per cent. This marks the third-lowest level recorded since the inception of this metric in 2017.
Shifting focus to the topic of ETFs, Greco comments that the US Securities and Exchange Commission (SEC) recently announced the postponement of decisions regarding the approval or rejection of certain bitcoin spot ETFs, including those from 21Shares, BlackRock, Valkyrie, and BitWise.
Greco writes that this announcement came a couple of weeks ahead of the original deadline. The SEC is likely to follow suit and postpone all remaining filings scheduled for October, with the next deadline slated for mid-January. Subsequently, the final deadline for most of the filings is set for mid-March.
Meanwhile, the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) continue to maintain stable discounts, at approximately 20 per cent and 28 per cent, respectively. These discounts have exhibited minimal fluctuations over the past four weeks, a contrast to the significant narrowing observed throughout Q3. These discounts reflect a neutral sentiment regarding investors’ expectations for the eventual conversion of these trusts into ETFs, with investors that are waiting for the SEC’s final decision.
Greco writes: “Despite several months of experiencing low levels of both volatility and trading volume, the upcoming two quarters hold the potential to become catalysts for the digital asset market, reigniting interest and trading activity. Notably, these pivotal moments are in close proximity. The final deadline for most Bitcoin Spot ETF approval or rejection is slated for mid-March, closely followed by the scheduled bitcoin halving in mid-April 2024.
“The bitcoin halving event involves a halving of miners’ rewards for mining bitcoin and has traditionally been a precursor to an uptrend in the months leading up to and following the event. Given the confluence of factors, including the SEC’s impending decision on ETFs, the focus and anticipation have shifted significantly toward the first and second quarters of 2024.”