- Bitcoin saw a 6.7% price increase, breaking a September trend since 2016.
- SEC’s decision to postpone Bitcoin ETF approvals creates anticipation.
- The upcoming Bitcoin halving event could impact market dynamics.
Written by Matteo Greco, a Research Analyst at Fineqia International (CSE: FNQ), a publicly listed digital asset and fintech investment company.
Last week, Bitcoin (BTC) closed at approximately $28,000, signaling a remarkable 6.7% surge from its previous week’s closing price of $26,250. Throughout the week, BTC displayed robust price action, with a noticeable spike to $27,000 on Thursday, followed by a period of consolidation for the next two days before embarking on another uptrend, ultimately ending the week at $28,000.
September delivered a notable 4% price increase for BTC, marking the first September price rise since 2016. This positive development offered relief to the digital asset market capitalization after two consecutive negative months in July and August. Bitcoin led the charge in this upward trajectory, evident in the Bitcoin dominance metric, which measures the relationship between Bitcoin’s market capitalization and the total digital asset market capitalization. Bitcoin dominance climbed to 50.4%, up from 49.9% the previous week, underscoring its relative strength compared to the broader digital asset market.
Despite these encouraging price movements, trading volumes remained notably subdued. Daily trading volumes on centralized exchanges, measured over a 7-day period, continued to display limited activity, with the cumulative trading volume over the past week hovering around $10.5 billion, closely resembling figures from the preceding seven days. On a monthly basis, trading volumes on centralized exchanges amounted to approximately $312 billion in September, reflecting a 26% decline compared to the $423 billion observed in August.
Low volumes often coincide with reduced market volatility. This connection is evident when examining BTC’s 30-day volatility, which has declined to approximately 23%. This marks the third-lowest level recorded since the introduction of this metric in 2017.
Shifting our focus to Exchange-Traded Funds (ETFs), the US Securities and Exchange Commission (SEC) recently announced the postponement of decisions on approving or rejecting certain Bitcoin spot ETFs, including those from 21Shares, Blackrock, Valkyrie, and BitWise. This announcement came a couple of weeks ahead of the original deadline. It’s likely that the SEC will similarly postpone all remaining filings scheduled for October, with the next deadline set for mid-January. Subsequently, the final deadline for most filings is slated for mid-March.
In the meantime, the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) continue to maintain stable discounts, roughly at 20% and 28%, respectively. These discounts have shown minimal fluctuations over the past four weeks, in contrast to the significant narrowing observed throughout Q3. These discounts reflect a neutral sentiment regarding investors’ expectations for the eventual conversion of these trusts into ETFs, with investors patiently awaiting the SEC’s final decision.
Despite several months of low volatility and trading volume, the upcoming two quarters have the potential to serve as catalysts for the digital asset market, reigniting interest and trading activity. Notably, these pivotal moments are approaching rapidly. The final deadline for most Bitcoin Spot ETF approvals or rejections is scheduled for mid-March, closely followed by the planned Bitcoin halving event in mid-April 2024.
The Bitcoin halving event involves a reduction in miners’ rewards for mining Bitcoin and has historically preceded an uptrend in the months leading up to and following the event. Given the convergence of factors, including the impending SEC decision on ETFs, the focus and anticipation have shifted significantly towards the first and second quarters of 2024.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.