Crypto and ETF markets prepare for another week of uncertainty

The correlation between the supply of capital to the new ETF funds, is starting to become clearer to the players in both the crypto and ETF markets. But the lack of real-time data, and delays in reporting turnover figures, nevertheless continue to create uncertainty. These are the important questions that the market is asking itself ahead of the third exchange week in which it has been possible to buy and sell Bitcoin spot-based ETFs: 1) Will the heavy buying interest behind the new ETFs continue? 2) Will Grayscale clients' massive sell-off of fund shares continue? 3) Will other Bitcoin investors continue to take profits?

January 22, 2024

Markets

Cryptocurrency

ETF funds

Finance

Crypto and ETF markets prepare for another week of uncertainty

At Kaupr, we will continue to follow developments in the ETF and crypto markets, and the interconnectedness between them, not least because the ETF launches are in many ways a historic meeting between crypto and classical finance. But increasingly we will shift our focus from a day-to-day news picture to looking more at the medium and longer term trends.

Fresh capital to buy Bitcoin

There now seems to be some kind of consensus that in the first 1.5 weeks the ETFs have net injected fresh capital into the purchase of Bitcoin in the range of USD 1.2 - 1.3 billion. Coindesk has visualized the capital flows to and from the various ETF funds below, but the number analysis originates from Bloomberg's ETF expert Eric Balchunas. It is now also believed that the ETFs, including Grayscal, now own close to 650,000 Bitcoins, against the 619,000 that Grayscale alone controlled at the entrance to 2024. Of the 650,000, the new ETF funds sit with ownership of 95,000 Bitcoins.

Continued uncertainty and selling pressure?

However, the market is still uncertain. The uncertainty now consists, among other things, in how large amounts have been moved from European ETP funds (a comparable variant of ETFs) to US ETF funds. It also seems to have been a selling pressure from mining companies who have sold Bitcoin and in doing so prepared for the upcoming halving of new Bitcoins, an event that will probably occur in April. Several analyses, including from analyst James Van Straten in CryptoSlate, also indicates that a number of investors have taken advantage of the past few weeks to take profits, following the strong price rise of Bitcoin from circa $30,000 in October to $44-46,000 around the EFT approval. In recent days, the Bitcoin exchange rate has ranged between 40.-41.000, after a larger drop towards the end of last week.

Recommended insights

To increase your insight into what the ETFs mean, for the crypto markets and for the meeting between crypto and classical finance, we recommend our four video interviews with Torbjørn Bull Jenssen (K33), analyst Vetle Lunde (K33), Christopher Kock from Swedish ETF provider Virtune and Danish analyst Mads Eberhard (Steno Research). These video interviews can be found embedded below. Kaupr has also started a newsletter on digital ownership and finance, Unleash Insight, which you can subscribe (for free) to. In the newsletter you will also find comments from Norwegian, Swedish and Danish financial and crypto experts. We have also published a separate article on kaupr.io with comments from Danish players under the title “Danish crypto players positive about the ETFs” as well as a blog post from Danish Christoffer Fentz, where Fentz advises Danish banks to start taking Bitcoin seriously.