Bitcoin price hits US$40,000 again before meeting resistance
Bitcoin is encountering stiff resistance at US$40,000, but for how long?
- Bitcoin continues strong bounce.
- Grayscale Bitcoin Trust (GBTC) reports $3 billion from institutional investors in Q4.
- Grayscale discontinues XRP Trust.
Bitcoin is currently trading at around US$39,000, cooling from a bounce back to US$40,000 and well above today’s low of around $36,900. Bitcoin is up today on the back of another strong performance in global markets yesterday.
In a period of 48 hours Bitcoin has risen 16.8% from yesterday’s low of US$34,245, signalling that the market is optimistic on Bitcoin even with the price resistance seen around the US$40-$42,000 mark.
PayPal has also seen a major step up in cryptocurrency transaction volume in the last week, with its still-new service seeing record volumes as Bitcoin prices bottomed out at US$30,000 on 11 January. It's not clear whether the volume was more from PayPal customers buying the dip, or from them panic selling at the local bottom.
Grayscale releases Q4 results
Grayscale Bitcoin Trust (GBTC) has released its results for the fourth quarter in a report titled “Investors Direct More Than $3 Billion to Grayscale Investments in Q4 2020”. Unsurprisingly, shares in GBTC have ballooned on the positive results. GBTC is up 7.88% over just 24 hours.
In the report GBTC claims that “institutions are here” and it’s unclear whether this is marketing spin or general confidence in its product. However, the numbers do tell a story with institutions accounting for “93% of capital inflows”, which it says is a sign that institutions are increasingly viewing Bitcoin as a “reserve asset”.
The total value of Q4 investments in GBTC was nearly three times the amount of Bitcoin mined in the same period. That means the amount of Bitcoin mined in Q4 GBTC capital inflows outstripped mined Bitcoin by 194% suggesting demand for digital assets exposure is running hot.
Grayscale’s bottom line has increased from $1.8 billion to $17.5 billion in assets in the year-to-date. Commenting on Grayscale’s performance GBTC CEO Michael Sonnenshein said, “We saw a meaningful acceleration of institutional participation,” adding that “There’s no longer professional risk of investing in the digital currency asset class — there’s probably more career risk in not paying attention to it.”
XRP in hot water over SEC filings with Grayscale winding up its XRP product offerings
GBTC has decided to wrap up its trust for holding Ripple Labs’ XRP. The move follows recent Securities and Exchange Commission (SEC) filings in federal courts against Ripple Labs and two of its executives for trading the digital asset while failing to file the product as a security with the SEC.
Ripple Labs CEO Brad Garlinghouse has voiced disagreement with the SEC lawsuits on account of the new Biden administration having to pick up the responsibility for the prosecution of the case.
The announcement from Grayscale is one of many public rejections of XRP from the industry, suggesting that there is little public support for Ripple Labs in its defence against the civil proceedings.
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Disclosure: The author owns a range of cryptocurrencies at the time of writing