Bitcoin continued its series of gains, reaching the level of $35,157 at approximately 2:30 a.m. GMT today, reaching the highest levels since last May. These gains were reversed and Bitcoin returned to the level of 33783 at approximately 7:15 am. However, Bitcoin is still up about 2.5%. While these rises pushed gains in the cryptocurrency market in general, as Ethereum touched the $1,850 level for the first time since August, in addition to Solana, which exceeded the $32 level at the peak of yesterday’s rises.
Bitcoin’s gains came amid widespread optimism in the markets about the possibility of launching spot Bitcoin exchange-traded funds (ETF) soon. In a new development, the iShares Bitcoin Trust, which will be managed by BlackRock, has been listed on the Depository Trust & Clearing Corporation (DTCC) and the ETF has the symbol IBTC.
While this listing in the DTCC does not mean that the fund has actually been launched or that this will inevitably happen. However, it may appear as part of BlackRock’s preparations to launch the ETF soon, amid what may appear to be optimism of the world’s largest asset managers about the possibility of eventually obtaining approval from the Securities and Exchange Commission (SEC).
This news follows previous reports that the SEC has no intention of appealing a court ruling forcing the agency to reconsider its decision to reject the conversion of the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. While this news pushed the discount on GBTC’s net assets value to about 11% last Friday, which is the lowest levels we have not seen since 2021, according to data provided by YCharts.
It seems that all of this news has prompted the largest liquidation of short positions this year. More than $161 million worth of Bitcoin short positions were liquidated yesterday, in addition to about $36 million today as of the date of writing. About $177 million worth of short positions were liquidated during the past 24 hours, according to data provided by CoinGlass.
While liquidating short positions may push it to further rises, with sellers covering their short positions by buying more Bitcoin.
Also, amidst this sentiment, and according to data provided by CoinShares, we witnessed the continuation of positive net flows into cryptocurrency-related investment products for the fourth week in a row, amounting to approximately $66 million. While Bitcoin accounted for the largest portion of these net inflows, at about $55 million, it may have achieved net flows of about $315 million since the beginning of the year. Net flows to short-Bitcoin products that bet on a decline in the price also decreased from $23 to about $1.7 million over the past week.
On the other hand, I think that these rapid rises in Bitcoin are somewhat exaggerated. Short positions still dominate the total positions in Bitcoin. This is at 52.16% and about 6 billion dollars, compared to 5.53 billion for buying positions.
The ETFs have not been launched and we do not have direct evidence of the possibility of approval by the SEC, which in turn still has more opportunities to procrastinate and delay the decision on asset managers’ applications.
In addition, regulatory and legislative concerns are still clouding this market, and I don’t see opportunities soon to dispel these concerns as the legal battles continue. Remember also that in the previous days when Bitcoin was trading above the $35,000 level, this was before the collapses in many of the major companies operating in the sector, which caused the collapse of confidence between participants, and these are fears that still exist to this day, in my opinion.
Therefore, talking about further fictitious rises for Bitcoin towards $100,000 or more, taking advantage of the recent rises and the prevailing sentiment, must be responsible and based on objective evidence. Even with the launch of these spot ETFs, I do not see any direct evidence that institutional investors or even individuals will pump their money into these funds. The cryptocurrency market has a lot to do to regain the confidence of participants and institutional investors, and even allay the fears and answer the questions of critics of this technology.
