The past 24 hours have been rather exciting for the cryptocurrency market as Bitcoin (BTC), the world’s largest cryptocurrency by market value, saw an impressive 8% gain, pushing its price to $28,800. This surge comes as various traditional finance firms announce their foray into the cryptocurrency market, signaling bullish sentiment.
Among the significant drivers of this rally, banking giant Deutsche Bank has applied for a digital asset custody license in Germany, while EDX Markets (backed by Citadel Securities and Fidelity) extends trading support for BTC, ether (ETH), litecoin, and bitcoin cash. This news comes after financial heavyweight BlackRock filed for a spot BTC exchange-traded fund (ETF) just last week.
The involvement of major financial institutions in the cryptocurrency industry denotes a shift in their stance on its potential, as FundStrat’s head of technical strategy, Mark L. Newton, observes. Furthermore, Grayscale Bitcoin Trust’s (GBTC) shares share price continued to soar, reaching over $16 for the first time since May 10. The continuous rise of GBTC shares fuels optimism for the possible conversion of the fund into an ETF, following BlackRock’s filing.
On the other hand, the significant discount on GBTC’s share price relative to the net asset value (NAV) has been reduced to 33%, the lowest since last September. The discount rate was last recorded at 34% in early March, showcasing a narrowing spread.
Investment management firm Invesco, with a massive $1.4 trillion assets under management, reapplied for a spot bitcoin ETF. Having previously filed for a bitcoin ETF in conjunction with Galaxy Digital, it withdrew its application in October 2021 after a futures ETF by ProShares was approved and initiated trading first.
In its refiling, Invesco argues that the lack of a spot bitcoin ETF drives investors towards riskier alternatives, such as FTX, Celsius Network, BlockFi, and Voyager Digital Holdings. The firm also emphasizes the importance of investor protection, stating that approval for a bitcoin ETF hinges on a surveillance sharing agreement with a regulated market.
The jumping of the Chicago Mercantile Exchange (CME) basis, or premium, to an annual high of 12% indicates bullish action at the global derivatives behemoth. However, the basis on offshore exchanges is only at 5.88%, lagging behind its CME counterpart.
While the recent bullish action and increased institutional participation within the crypto ecosystem signal potential growth, there remains a degree of skepticism, particularly regarding investor protection and the true impact of traditional finance firms venturing into the space. Crypto enthusiasts will have to remain vigilant, as the market remains unpredictable and potential risk lurks around every corner.
Source: Coindesk
