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Bitcoin stabilises as ETFs see robust trading: Fineqia

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Matteo Greco, Research Analyst at Fineqia International, writes that bitcoin (BTC) concluded the week at approximately USD42,000, reflecting a 1.1 per cent uptick from the prior week’s closing value of roughly USD41,600. 

Greco writes that early in the week, there was a negative price trend, with BTC dropping below USD40,000 and hitting a weekly low of about USD38,500 on Tuesday. “Subsequently, BTC found stability within the USD39,000 to USD40,000 range before experiencing a robust upward movement on Friday, approaching the USD42,000 mark. Throughout the weekend, the price held steady, confirming a weekly closing value of around USD42,000.”

The primary focus continues to be on BTC Spot ETFs, he comments. “Following strong initial net inflows, the newly launched ETFs started to witness the anticipated decrease in inflows, offset by continuous outflows recorded by the Grayscale Bitcoin ETF (GBTC) post its conversion from Trust to ETF. Despite approximately USD405 million in outflows from BTC ETFs during the past week, the overall inflow since launch remains notably positive.

“The rate of outflows from GBTC linked to the transition from Trust to ETF, allowing for share redemptions on the primary market, is anticipated to decrease as the surge in redemptions may have peaked. The declining trend in redemptions was evident towards the end of the previous week, with the outflow rate decreasing from the initial daily average of USD500 million observed in the initial days of trading. On Thursday, GBTC saw an outflow of about USD394 million and on Friday, the outflow hit its lowest point since launch at approximately USD255 million.

“The recent days of outflows suggest a diminishing pace of investors withdrawing funds from GBTC, indicating a potential for a more stable flow for the Grayscale product and, by extension, for BTC Spot ETFs. Despite last week’s net outflow, trading volumes remain robust, underscoring continued investor interest in these financial products. Since their launch, the cumulative volume of ETFs has nearly reached USD25 billion, with a daily average trading volume of approximately USD2.2 billion.”

Greco notes that in contrast, volumes on centralised exchanges for digital assets have decreased. From January 22nd to January 28th, the cumulative volume on centralised exchanges was USD29.5 billion ,Greco writes, similar to the volume observed one week earlier but indicating a 41.5 per cent decrease compared to two weeks prior, shortly after the ETFs’ launch, when the cumulative volume reached USD50.4 billion.

“This data supports the speculation surrounding the narrative of BTC Spot ETFs among digital asset market participants, with a peak in volume during the approval week followed by a swift decline and stabilisation in trading volumes. Conversely, traditional financial products have displayed a more consistent pattern, maintaining strong volume since day one and still recording about USD1.7 billion in trading volume on the last Friday, reaffirming the significant impact of these products in bringing traditional finance investors into the realm of digital assets.”

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