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Future is rosy for digital assets: CoinShares, ETC Group and Fineqia International

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The digital asset fund flows report from CoinShares this week reports that digital asset inflows totalled USD176 million last week, reaching a 10-week total of USD1.76 billion, the highest since October 2021’s futures-based ETF launch in the US.

Canada, Germany, and the US led with significant inflows, while Hong Kong experienced minor outflows; Asia overall saw year-to-date net outflows, the firm writes.

Bitcoin saw USD133 million in inflows, Ethereum USD31 million, while blockchain equities marked their seventh consecutive week of inflows.

ETC Group noted that bitcoin crossed USD40,000 for the first time since April 2022 amid a very significant repricing in US monetary policy and futures short liquidations.

The firm comments that bitcoin is clearly gaining momentum with three consecutive positive months in a row so far.

Matteo Greco, Research Analyst at Fineqia International noted bitcoin’s price rise, surging to USD42,000, it’s all time high for this year.

Greco writes that the increase followed a 9.5 per cent increase last week when it closed at about USD40,000, compared with the previous week’s closing value of USD37,450. 

“From Monday to Thursday last week, it maintained a stable price before a robust upward movement started on Friday, when it surpassed USD38,600. The price trajectory persisted over the weekend, closing at about USD39,500 on Saturday and approaching USD40,000 on Sunday. The price spiked overnight reaching a new level not seen so far this year. This rise marks the seventh consecutive week of BTC price increases, a streak not observed since October to November 2020, more than three years ago. This demonstrates renewed confidence in the digital asset market, with BTC’s price increasing by approximately 55 per cent during this period.”

Greco writes that the recent upward trend increased BTC’s dominance by 1 per cent, i.e. its market capitalisation against the entire digital asset market, closing the week at 53.3 per cent. The overnight spike in BTC further elevated it to 53.8 per cent, underscoring BTC’s strength in comparison to the overall market.

“The sharp BTC upswing resulted in the liquidation of around USD150 million in short positions in the last twelve hours. In moments of intense market movements, such liquidations often amplify the trend’s momentum, in this case, facilitating a substantial upward spike with BTC reaching the USD42,000 level. Despite the price surge, approximately USD50 million in long positions were also liquidated in the past 12 hours, totalling more than USD200 million.

“Regarding ETFs, the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) continue to maintain low discounts, standing at 8.7 per cent and 14.6 per cent, respectively. This reaffirms investor confidence in the anticipated mass approval of BTC Spot ETFs in early January 2024. The official closing of the comments period is set for January 4, leaving a window between Jan. 5 and Jan. 10, 2024, for approval or rejection. Since ETFs cannot be approved during the comments period, and with the deadline for 21Shares filing being Jan. 10, this six-day window will determine whether BTC Spot ETFs will be approved for trading in the US.

“Given the current market momentum, a retracement in December is plausible to reduce open interest and leverage before building an upward trend as the SEC decision deadline approaches. An approval is expected to bring short-term capital influx from the traditional finance investors, fuelling the uptrend, while a rejection might trigger a short-term negative price action due to high expectations of approval by market participants. A rejection could prompt market participants to adjust their positions, potentially leading to a downward trend in January. Analysts remain confident, however, maintaining a 90 per cent probability of approval.”

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