Bitcoin’s value jumps up despite fundamentals showing major weakness
The rejection of Grayscale's application to convert its BTC investment vehicle into an ETF could see the asset register losses in the near term.
- The European Union (EU) has issued new sanctions against cryptocurrencies by limiting the movement of digital assets within the bloc.
- Investors of all sizes have continued to accumulate Bitcoin at a rapid rate ever since the currency scaled down to the AUD$29.3K (US$20K) region.
- Bitcoin's total cap stands at AUD$562B (US$384B) while its share of the crypto market lies at 41.5%.
After having dipped as low as AUD$27,250 (US$18,600) a little under 12 hours ago, Bitcoin has regained some of its bullish momentum. BTC is now trading at AUD$29,500 (US$20,130) while exhibiting weekly losses of -4.7%.
This lacklustre momentum comes amidst the digital currency failing to reclaim its all-important 200-week moving average (WMA), a popular metric used by traders to gain a sense of whether an asset is heading up or down, while also identifying potential support and resistance areas. Many analysts are of the view that Bitcoin's support around AUD$29,000 (US$20,000) is just a "relief bounce" and that the coming few days could see more negative price action for the cryptocurrency.
The incoming downturn could be compounded by news of the United States Securities and Exchange Commission (SEC) recently rejecting Grayscale's application to convert its popular Bitcoin investment instrument, the Grayscale Bitcoin Investment Trust (GBTC), into an exchange-traded fund (ETF). In response, the firm announced that it would be suing the regulator for failing to provide an adequate reason for dismissing its application.
The European Union (EU) too has voted to heighten sanctions on all crypto transactions emanating within its borders. In a recent press release, a spokesperson for the administrative body noted:
"The agreement extends the so-called 'travel rule', already existing in traditional finance, to cover transfers in crypto assets. This rule requires that information on the source of the asset and its beneficiary travels with the transaction and is stored on both sides of the transfer. Crypto asset service providers (CASPs) will be obliged to provide this information to competent authorities if an investigation is conducted into money laundering and terrorist financing."
Following the announcement, the Crypto Fear & Greed Index, a popular metric to gauge consumer sentiment, dipped to a multi-month low of 11/100 (i.e. extreme fear).
BTC accrual efforts speeding up
While pundits are waiting for another capitulation scenario to arise, on-chain data suggests investors have been buying Bitcoin en-masse. Glassnode analysts have noted that a growing forum of investors have continued to add BTC to their portfolios.
Holders with 10 coins or less in their wallets are not only stacking, but doing so at a pace that has not been witnessed since 2017, a time when the crypto hit a relative high of AUD$29,000 (US$20,000). Whales are also taking out their coins from exchanges and moving them to private wallets at a record pace.
Disclosure: The author owns a range of cryptocurrencies at the time of writing
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