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Real fireworks! Bitcoin experienced a sharp increase, surpassing $59,000 during the early hours of this Wednesday, with a 5% increase over the last 24 hours, thus reaching a market capitalization of $1.2 trillion. This significant rise comes as exchange-traded funds linked to Bitcoin recorded more than $3 billion in cumulative transaction volumes on Tuesday, thereby fueling demand. This period is also marked by the anticipation of the upcoming Bitcoin halving event scheduled for April, sparking a wave of buying before the deadline. Bitcoin’s price has not seen the current levels since November 2021.
Moreover, the market witnessed liquidations of short positions on Bitcoin, amounting to $25 million since the early hours in Asia, according to data from Coinglass, which could have stimulated the price increase. The “fear and greed index,” a market sentiment barometer, reached 82 on Wednesday, signaling a state of extreme greed, the highest level observed in more than a year.
The cryptocurrency market has indeed regained significant momentum, surpassing the $2 trillion market capitalization threshold again, a first since April 2022. Together, BTC and ETH now represent $1.5 trillion, or 67% of all digital assets worldwide.
After its transformation into an ETF, the Grayscale Bitcoin Trust (GBTC) has seen a slowdown in fund outflows, after having recorded consistent losses totaling $7.4 billion. These outflows moderated, reaching lower levels since the fund’s official conversion in January. The disaffection for GBTC is partly explained by its high management fees compared to those of its competitors like BlackRock and Fidelity, which has deterred new investors and prompted existing holders to sell their shares following the activation of ETFs and the exploitation of arbitrage gaps. However, once these fund outflows slowed down, Bitcoin’s price experienced a significant increase, although this trend was temporarily interrupted by a new wave of withdrawals. Concurrently, BlackRock recorded a record transaction volume for its Bitcoin ETF, highlighting the growing interest of institutional investors in these products.
The newly approved spot Bitcoin ETFs in the United States collectively already hold more than 300,000 BTC, which represents over $17 billion. This asset management demonstrates notable Bitcoin adoption by institutional investors, with these ETFs controlling 1.5% of the total available BTC. Outside of these entities, Grayscale stands out by retaining 444,446 BTC within its ETF, raising the total value managed by these products to about $43 billion. BlackRock emerges as a major player with over $7 billion in assets under management, revealing sustained interest in investment vehicles that track Bitcoin’s price without the concerns related to its custody. After initial price volatility following their introduction, the appeal for Bitcoin ETFs continues to be affirmed, demonstrating the growing importance of cryptocurrencies in conventional investment portfolios.
With the rise of spot ETFs for Bitcoin in the United States, the share of Bitcoin transactions conducted over the weekend has reached its lowest level, accounting for only 13% of the total volume, a significant decrease compared to previous periods. This shift marks a notable change in the structure of the Bitcoin market, traditionally active 24/7, towards a model more aligned with the traditional business hours of Monday to Friday, especially on American platforms. This phenomenon is attributed to the increase in institutional participation and the degradation of market infrastructure, particularly following the bankruptcy of crypto-oriented banks like Silvergate and Signature. Kaiko analysts also note that weekend liquidity has deteriorated, observed through the widening average gap between buy and sell prices, especially on Coinbase compared to Binance. While spot ETFs for Bitcoin boost weekday liquidity, they might accentuate the disparity between weekday and weekend transactions, further influencing market structure.
MicroStrategy has (again!) strengthened its position as a staunch Bitcoin proponent by recently acquiring an additional 3,000 BTC, bringing its total investment to approximately 193,000 BTC, which represents a market value of $10.28 billion. The company, led by Michael Saylor, has invested about $6.09 billion in Bitcoin, affirming a long-term holding strategy despite potential profits exceeding $4 billion. Saylor views Bitcoin as a premier asset class, comparable to tech giants, and considers the growing institutional adoption and traditional financial products as major catalysts for its future valuation.
Legally, the defense team for Sam Bankman-Fried, the former CEO of the cryptocurrency exchange FTX, has requested a 63 to 78-month prison sentence from a U.S. court, arguing for consideration of his personal ethics and philanthropic commitment. In their arguments, the lawyers challenged the pre-sentencing report’s suggestion of a 100-year sentence, labeling it grotesque, and questioned the $10 billion loss estimate in FTX’s bankruptcy. They highlighted Bankman-Fried’s moral values, his interest in philanthropy, and asserted that his actions were not motivated by greed or social status. However, Bankman-Fried was found guilty by a New York jury of defrauding FTX and Alameda Research investors
, an act labeled by the prosecution as one of the largest financial frauds in U.S. history. The sentence is expected to be pronounced next month.
In a landmark judgment for U.S. federal financial prosecutions, the cryptocurrency exchange platform Binance agreed to plead guilty and pay $4.3 billion in fines and penalties to settle its case. This sum includes a criminal fine of $1.8 million and forfeiture of $2.5 million, penalizing Binance’s failure to implement an effective anti-money laundering program. Prosecutors emphasized that the platform’s use by illicit actors for activities such as cryptocurrency mixing, processing cyber-ransom proceeds, and other online scams justified this record sanction. While Binance assumes responsibility and commits to enhancing its compliance program, the status of its founder, Changpeng “C.Z.” Zhao, remains uncertain, with his sentencing for money laundering sanction violations postponed. Judicial authorities are also demanding additional measures, such as Zhao surrendering his Canadian passport and providing advance notice for any travel. This settlement is part of broader efforts to hold Binance accountable and improve its compliance practices following similar agreements and previous fines imposed by other U.S. regulatory bodies.
Although short-term profit-taking is likely with such a parabolic price increase, technically speaking, nothing now separates Bitcoin from a test of its all-time high. The fund itself remained fully exposed to Bitcoin throughout the week.
The presented information is as of February 28th, 2024, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
