BTC broke $40,000 in one fell swoop, what happened behind the scenes?

Author: Pantera Compiler: Qin Jin Carbon Chain Value

The conversion of Grayscales’ GBTC trust to a spot ETF may have a negative impact on the price of BTC (BTC).

The market has bought the rumor, and we can’t ignore the second part of the rumor (buy the rumor, sell the news). There is a possibility that the market will sell the news, causing the price of BTC to drop significantly.

In the coming years, we may see a repeat of the BTC cycle, and it is worth noting that ETFs may have a positive impact on the price of cryptocurrencies.

However, the conditions for a new bull market are not yet in place, and we should not rule out the possibility that the market will go through a small bear market phase before that.

Speculators are maximizing their profit potential by betting on these events, and Grayscale’s GBTC has been in the spotlight since the start of the year, with billions of dollars flowing into the secondary OTC market.

Therefore, as soon as trading begins, new (and old) investors in GBTC rush to liquidate, and the price of BTC falls significantly.

Analysts support the bearish view

CNBC (December 17, 2017)

The deadline for some ETF applications is early January 2024, which means we may hear more in December this year.

JPMorgan analyst Panigirzoglou believes that GBTC could see “at least $2.7 billion in outflows” as it converts to ETFs.

It is expected that the outflow of investors from GBTC will likely cause prices to fall and return to cycle lows (a move that will also be consistent with BTC’s historical price cycle).

As a result, the ETF may not be bullish BTC (at least not immediately), but rather a sell-news event, like the CME and Bakkt Futures launches we witnessed earlier.

The CME paved the way for BTC futures trading on Wall Street, which many consider to be the ultimate “sell news” event. The CME launched BTC futures in December 2017, coinciding with the peak of the bull market run and the beginning of a long (two-year) bear market.

Bakkt BTC futures were launched in September 2019 and allow cash-settled futures (unlike CME’s BTC-settled futures). However, Bakkt is another sell-sell news event. BTC entered a new bear market that lasted several months, until the events of March 2020 and macroeconomic and social conditions (US Federal Reserve (FED) unlimited quantitative easing) helped the cryptocurrency market.

We have several funds that are applying to BTC spot ETFs, which the SEC may have to accept despite political pressure.

GBTC Big Discount

Source: YCharts

Traders are buying GBTC in large quantities in 2023 due to the large gap between GBTC and BTC spot prices (discounts as low as 48%) and the increased odds of the SEC accepting Grayscale’s proposal to convert the GBTC trust into an ETF.

Currently, GBTC is trading at a discount of 10% (lower than BTC’s spot price on exchanges), which has fallen significantly since the entry of approximately $2.5 billion into GBTC on the OTCQX, GBTC’s only trading market.

We can foresee that once ETFs start trading, most of these trading volumes will turn into outflows.

Most speculators see it as an annual deal and bet a lot of money on the potential for GBTC to transform into a BTC ETF.

However, the main event in 2024 will be the BTC halving (and the speculation surrounding it), which could also be the last halving of significance and become a turning point for excessive excess returns on BTC prices.

With multiple spot ETFs active, institutional funding flows could be a decisive factor driving the BTC price above $100,000 in 2024.

Conclusion

While the financial industry has shown strong interest in cryptocurrencies, the adoption of cryptocurrencies in real life will be decided by the free market, not the SEC.

The market will determine the use cases and benefits of the cryptocurrency, and the end-user will determine its usefulness and usefulness.

As the financial community evaluates the BTC of the BTC version of the stagnant scalability, it will also evaluate whether it can be used as a reliable store of value or gain meaningful adoption through the Lightning Network.

In addition to BTC (BTC), the financial community also acknowledges the quality and importance of BTC other cryptocurrencies such as cash, ETH, and LTC.

Looking ahead, the cryptocurrency market is expected to continue its good momentum over the next year.