By Matteo Greco, Research Analyst at the publicly listed digital asset and fintech investment business Fineqia International
Bitcoin (BTC) closed last week around $26,200, a 10.6% decrease in price from its previous week’s closing price of $29,300. The nosedive followed a two-month period of really low volatility, with BTC ranging for about 60 days on a $3,000 range price. On the 16th of August, the annualised volatility of BTC measured on 30 days period, reached 16.29%. This is the lowest level ever recorded since BTC launch in 2009. Between the 17th and 18th of August the market fell, including a flash crash that caused a 10% decrease in price for BTC in just 1 hour. During the dip, BTC’s price decreased to $25,100, before recovering and holding up to the $26,000 price level.
The recent turmoil led BTC price to trading levels that mirror the ones preceding the Blackrock filing for their BTC Spot ETF. The fear-of-missing-out (FOMO) which lasted a few weeks after the filing seem to be now disappeared, waiting for news on the matter.
Remaining on the ETF digital asset market, the resolution of Grayscale versus SEC was postponed for a second time, surpassing the classic 160-day resolution deadline. This possibly postpones the outcome to the 22nd or the 25th of this month. Waiting for the decision, the Grayscale Bitcoin Trust (GBTC) discount narrowed down to less than 26%, the lowest value registered in the last 12 months. The discount was over 40% in July, and the strong narrowing of it shows how the perceived likelihood of an ETF Spot approval in the US in the future strongly increased, pushing investors to buy the GBTC at a strong discount, believing in a future ETF listing.
The decrease in BTC’s price did not stop the increase in miners’ competition, in consideration of the halving that is getting closer and is currently scheduled towards the end of April 2024. BTC’s hashrate, a measure of the computational power on a blockchain network, reached a new all-time high during last week. The interest of miners and investors towards the market and specifically BTC network remains high in spite the last few months not showing any positive price action.
The latest volatility has been favoured also by the low liquidity currently available in the market, mainly due to low levels of trading that led market makers, entities that absorb sudden fluctuations in supply and demand, stabilising prices and help providing a more predictable trading environment, to leave or scale back into the market, waiting for a better time to fully resume operations. It is news of last week that one of the most important market makers, GSR, implemented two rounds of lay-offs in response of the poor market conditions faced by market makers during the last few months. Before GSR, also other two important market makers, Jane Street and Jump, took similar actions showing a general difficulty for market makers in the current market state.