Bitcoin and ether began the trading week in Asia on a steady note, driven by narrowing discounts on Grayscale Bitcoin Trust (GBTC) and heightened anticipation for the approval of spot bitcoin and ether exchange-traded funds (ETFs). The crypto market is experiencing high levels of optimism, with investor inflows surpassing $1 billion this year. The upcoming U.S. economic data and Federal Reserve communications are expected to have a significant impact on crypto market trends.
Bitcoin (BTC) started the week trading above $37,000 in Asia, while ether (ETH) was above $2,000. These prices remained relatively unchanged from the rally of the exchange-traded funds that closed the previous week. The rally helped narrow the discount on GBTC to levels not seen since July 2021. According to data from YCharts, the discount on GBTC to its net asset value is currently at 10.35%. This discount has been shrinking since reaching a record of almost 50% during the depths of the crypto winter induced by FTX in December last year.
Last week, CoinDesk reported that the U.S. Securities and Exchange Commission (SEC) had initiated discussions with Grayscale Investments regarding the conversion of GBTC into a spot bitcoin ETF. If successful, this conversion could provide significant market momentum and liquidity. It is worth noting that both Grayscale Investments and CoinDesk are owned by Digital Currency Group.
CoinDesk recently reported that bitcoin fund holdings have reached an all-time high, driven by investor enthusiasm over the anticipated approval of a spot bitcoin ETF in the U.S. Total inflows have exceeded $1 billion this year. The market sentiment has also been positively impacted by the news of BlackRock, a fund-management giant, planning to issue an ether-based ETF. This announcement pushed the price of ETH to a seven-month high, outperforming bitcoin.
In a recent interview with CoinDesk TV, Kenny Estes, the CEO of Diffuse Funds, expressed confidence in the approval of a bitcoin ETF, citing BlackRock’s decision to apply for an ether ETF. Estes believes that BlackRock’s application for an Ethereum ETF suggests a predetermined outcome of approval. He stated, “I think it will get approved, and the biggest reason for that is because BlackRock put in the application. The fact that they’re putting in an Ethereum application, to me, sounds like it’s a predetermined outcome that it will be approved.”
Furthermore, trading activity on decentralized exchanges (DEXs) has reached a six-month high as traders shift from altcoins to ether in anticipation of ETF approval. Research from WOO Network, shared with CoinDesk, indicates that Arbitrum is the leading performer in the Layer 2 race, with six times the 24-hour trading volume of Optimism and 25 times that of Base. However, Ethereum remains the dominant player, overseeing more than twice the volume of all Layer 2 scaling solutions combined. The volatility surrounding BlackRock’s apparent filing for an ETH ETF has contributed to this trend.
Crypto traders will closely monitor the release of Core Consumer Price Index data and U.S. retail sales data later this week. Additionally, speeches by New York Fed President John Williams are expected to provide insights into the direction of interest rates.
In conclusion, bitcoin and ether have started the trading week with stability in Asia, driven by narrowing discounts on GBTC and the anticipation of ETF approvals. The crypto market is experiencing record investor inflows, and the upcoming U.S. economic data and Federal Reserve communications are expected to shape market trends.