100,000 BTC Scooped Up by Bitcoin Funds in the First 3 Months of 2021

Exchange-traded bitcoin investment vehicles now hold 4.3% of the circulating BTC supply, as per Arcane Research.

A steady amount of Bitcoin has been gobbled up from the market throughout the first quarter of 2021, as per the data shared by Vetle Lunde, an analyst at Arcane Research.

Exchange-traded bitcoin investment vehicles had just under 695k BTC under management at the end of last year, which has increased to 800,416 as of March 26th. This represents 4.3% of the circulating bitcoin supply.

During the same period, the price of Bitcoin went up more than 100%, from about $27,500 to $55,000.

These Bitcoin-related products added more than 40k BTC in the month of January. While only half of this was added in February, and about 43,692 BTC were added in March. Overall, this year, 100,000 BTC have been absorbed by Bitcoin funds.

Combined, the exchange-traded bitcoin investment vehicles manage $43 billion worth of bitcoin, noted Lunde.

The world’s largest digital asset manager, Grayscale Investments, is the leader in the space, accounting for 82% of the market, managing $36.5 billion worth of bitcoin.

GBTC, meanwhile, continues to trade at a discount, currently at 7.27%, ever since earlier this month.

“It’s a perpetual security, and it charges 2% mgt fee per year. So if duration is 7-10 years, a 15-20 percent discount to NAV makes sense. That’s also where many closed-end funds trade,” commented Mike Novogratz of Galaxy Digital, which also holds GBTC shares, on the discount.

According to Novogratz, GBTC used to be “the only game in town,” which has now changed with the launch of several Bitcoin exchange-traded funds (ETF) in Canada that too at a much lower fee.

“The ethos of crypto has always been about ‘transitioning’ to a world that eliminates the rent takers,” added Novogratz.

Arcane Research also noted that the three recent ETF approvals in Canada had pushed Grayscale’s dominance in the market on a decline. The combined AUM of the Purpose ETF, Evolve ETF, and Galaxy ETF has reached a market share of 2.5% in just a couple of weeks.

Grayscale is looking to turn its closed-end fund into an ETF and is currently hiring many executives.

This is why the market is seeing fee compression. Recently, NYDIG cut its cost to 0.30% of net asset value per year.

“Trying to transition the fund to an ETF is difficult but elegant. My firm belief is the community won’t allow rent takers for too long,” said Novogratz adding, “GBTC provided a huge service to the crypto community and accelerated adoption.”

Read Original/a>
Author: AnTy

Arcane Research: BTC Prices Might Have Been Manipulated Before CME’s Bitcoin Future Settlement Dates

According to the latest research by Arcane group, Bitcoin prices have fallen on average by 2% before the settlement date of CME’s bitcoin futures contract, reported Kryptografen.

CME bitcoin futures contract was launched back in 2017 for institutional investors on Wall Street. The contract expires monthly, and several reports pointed towards the peculiar price drop towards the end of its expiry date every month. The research found out, in the last 20 months the prices have fallen constantly in 15 months.

The market manipulation theory gains even more weight for the fact that these contracts are settled in US Dollars rather than bitcoin. The future contracts are majorly traded by institutional investors, thus investment is also quite significant which makes it much easier to sway the market movement.

Average Bitcoin price fall on a daily basis shows great deviation before settlement dates

A fall in prices benefits the investor as they need to pay less in dollars. Thus, according to the theory, these Wall Street investors go long on ‘physical’ bitcoin which they can hold and go short on futures contracts. By following this strategy they become resistant to market fluctuation.

If the price of bitcoin rises, they have to pay a higher settlement on their futures contracts, however, those losses are counterfeited by the gain on ‘physical’ bitcoin they hold. On the other hand, they can sell off their ‘physical’ bitcoin towards the settlement date which would trigger a fall in prices in the spot market, and then they can profit on the settlement contract as well by paying a small price.

The research found out that during the period between January 2018 and September 2019, on any given random day, bitcoin prices have fallen on average by only 0.06%, however, if we specifically look at a day near the contract settlement date, the average fall is a significant 2.27%. The research notes that,

“To avoid losing important price movement, while not including too much irrelevant noise, the interval being checked is set to 1.5 days. As the settlement is at 4 pm in London last Friday of the month, the price movements are checked this day, as well as the day before the settlement. This then implies the last 40 hours before the settlement time. Including only the last 24 hours before settlement means that much of the day before a settlement is excluded, and a slightly broader interval appears to be more suitable. All figures for returns in the analysis are calculated for intervals of 1.5 days, for a correct comparison basis. Analysis of intervals in addition to micro-dynamics on the various spot exchanges prior to settlement is a natural extension of this analysis.”

The prices have fallen mostly when the market sentiment was bullish

Another interesting thing to note is that Bitcoin prices have fallen most in the months when the market sentiment was bullish and the average daily return as high as 4%.

The research mentioned that statistically, the probability of such a consistent fall in prices (15 out of 20) is less than 2%. The report also noted that they did not take into consideration several factors which would provide a clearer pattern in prices, and thus further analyses are required. The research report said,

“One should look more closely at the micro-dynamics in the various spot markets around settlement and signing of new futures contracts, and compare this with the value of outstanding contracts/contracts being settled.”

“In addition, qualitative studies, where you directly contact those who sign and trade the bitcoin futures contracts at CME, could be of great value in order to shed light on the situation.”

Looking at these observations and hypothesis, the fall in prices right before settlement dates on such a consistent basis can’t be a mere coincidence. Thus, further studies into the issue might reveal many other factors related to these market manipulation.

Read Original/a>
Author: Hank Klinger

Arcane Research Puts Bitcoin (BTC) Dominance Higher Than 90% in Market Capitalization

Bitcoin’s dominance went up a lot this year, soaring above 70%. Now, a new study made by Arcane Research has shown that the actual level of BTC dominance may be considerably higher than most people thought. According to this new study, dominance can be over 90% right now, it really just depends on what kinds of metrics you are using.

It was argued that to measure the dominance more accurately, someone should use the liquidity as well, not only the whole market cap. The researchers believe that it is easy to sell the tokens at their official prices when you only need to sell a few, but what if you needed to sell a million tokens? Is there enough liquidity? This is the main question.

So they used trading volume to indicate liquidity and recalculated the market cap. Bitcoin’s dominance went through the roof, figuring at around 90%. Despite other tokens also being valuable, most of the time only Bitcoin is being traded.

Altcoins were removed from the study, though, as the researchers believe that they are not really competing directly with cryptocurrencies that have their own intrinsic value.

Will Altcoins Cease To Exist?

Now that it was proven that the dominance of BTC is even higher, will altcoins be doomed? Some people, such as the famous trader Max Keiser, have affirmed that the era of altcoins and hard forks was over and that only Bitcoin was the future.

It is, however, hard to tell for certain what will happen, as it depends on many variables. It does not look like any other crypto will topple Bitcoin, but there seems to exist space for more assets.

Read Original/a>
Author: Gabriel Machado