Bitcoin (BTC) witnessed a strong almost 7% rise yesterday, breaking its long-standing sluggish performance. This spike rekindled the bullish sentiment in the cryptocurrency space and was attributed to the US District Court’s decision supporting Grayscale Investments in its battle against the US Securities and Exchange Commission (SEC). After this result, some data revealed that the amount of Bitcoin transferred to exchanges has increased. Here are the details…
Bitcoin community enthused with Grayscale victory
As we reported on cryptocoin.com, the US District Court’s decision forced the SEC to initiate a comprehensive review of Grayscale’s previous decision, which rejected an offer to convert the existing Bitcoin Trust into a full-fledged exchange-traded fund (ETF). This landmark development has brought new vitality to the cryptocurrency markets, as market participants see the potential approval of a Bitcoin ETF as a pivotal moment for mainstream cryptocurrency adoption. However, amid the prevailing optimism, seasoned investors and analysts are warning of caution.
The increase in BTC’s value was accompanied by a staggering $1 billion in open interest, which marked an increase in futures contracts. In addition, the shift in financing rates into negative territory and increased short selling adds an additional layer of complexity to the current market dynamics. The emerging bullish trend in the market following the court ruling contrasts with an environment ripe for speculative behavior and increased volatility. The combination of these factors shows that while the near future looks promising, it also carries an air of uncertainty. The same factors that cause optimism can contribute to unexpected market volatility in different circumstances.
Investors take action
It is particularly noteworthy that the current Bitcoin price is closely aligned with the cost base of short-term investors entering the market around $27,900. This alignment of price and investor sentiment has increased sentiment in this range, potentially amplifying market reactions in this region. Ahead of the important decision, about 30,000 BTC worth $822 million at a market price of $27,400 were moved to addresses linked to centralized exchanges, according to data tracked by analytics firm Santiment.
Perhaps some traders predicted the price increase and prepared for the same situation in advance by moving the coins to the exchanges. Investors usually move their coins to exchanges when they want to liquidate their coins or use them as margins for derivative transactions. Therefore, an increase in stock market entries is often seen as a harbinger of price turbulence. Santiment echoed onchain analyst Ali Martinez’s comment as follows:
The stock market supply of Bitcoin increased significantly just before Grayscale’s victory over the SEC. It seems pretty obvious that there are forces that know about the inevitable increase in crypto market value as a result of this outcome.
https://twitter.com/santimentfeed/status/1696600992882757807
CryptoQuant: Average entry at two-month high
Address-based onchain metrics are subject to some issues. Therefore, it is difficult to draw firm conclusions from them. Data tracked by South Korea-based CryptoQuant shows that the average inflow, or amount of BTC transferred to exchanges per transaction, soared to 1,146, the highest level since June 21, as prices surged to $28,000. The increase in average entry indicates that investors are sending a large number of coins in one transaction, which is a clue of potential selling pressure. This time, however, this is not quite the case, as average outflows have also risen to the highest levels in the last two months, and the net balance held has decreased, especially on exchanges that offer spot trading. CryptoQuant said:
Reserves held on US-based spot exchanges continue to decline, while reserves on offshore exchanges offering derivatives trading continue to increase. This is a sign that derivatives and offshore exchanges are driving the current price action.
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