The Week in Crypto – 25th October 2021

If you are a crypto enthusiast then you know it was a crazy week in the markets!! Let's check out the highlights:

  • Bitcoin hit a new all-time high, Ether follows
  • First Bitcoin ETF trades near $1B on its first day
  • Grayscale to "force the SEC's hand" with its Bitcoin ETF application

Bitcoin hit a new all-time high, Ether follows

The price of the largest cryptocurrency by market cap is skyrocketing. Earlier this week Bitcoin broke its previous AHT at $64,804, reached on April 14, to hit a new ATH at $66,930 according to CoinMarketCap.

Only a few months ago BTC was changing hands at $30,000, 50% down from its highest rate. The main reasons for the drop having been China FUD and Tesla's ecological concerns around crypto mining.

However, it looks like the crypto investors are bullish and Bitcoin took Ether on its rally as well. The second largest cryptocurrency reached $4,366, breaking its previous ATH of $4,357.

Even though both currencies have different characteristics it seems that they are remarkably correlated. On a scale of -1 to 1, the leading cryptocurrencies have a correlation of 0.82 over the past 30 days with a yearly value of 0.68.

First Bitcoin ETF trades near $1B on its first day

After many years of preparation and numerous applications, the first Bitcoin ETF launched this week, trading $280 million in its first 20 minutes! By the time the market closed on Tuesday, the trading volume was approaching $1 billion ($994 million).

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Last Friday ProShares became the first company to receive SEC's approval to bring a Bitcoin futures ETF to the market. The new financial derivative is trading on the New York Stock Exchange under the ticker BITO. The initial price was $40 and hit its tipping point at $42.15, an increase of 5.4% eventually closing at $41.94, or an increase of 4.85%.

Only one ETF has ever achieved over a billion at launch and this was BlackRock's Carbon Transition Readiness in April. According to an ETF expert from Bloomberg, James Seyfarrt "It was not expected. We thought it was going to be a big hit, we thought it was going to be successful".

Competing Crypto ETF, Invesco, decided not to take part in the race and delayed its application as a third company (VanEck) received SEC approval for VanEck's Bitcoin Strategy ETF which will be traded on the New York Stock Exchange from October 25.

Grayscale to "force the SEC's hand" with its Bitcoin ETF application

The excitement of the new futures ETF pushed Grayscale to uncover its crypto plans. The company cemented its idea to convert its Bitcoin Trust (GBTC) to a Bitcoin ETF and submitted an application to do so.

Grayscale has $52.6 billion in assets under management with $38.6 billion, or 72% of all funds, concentrated in GBTC. The fund is popular among the institutions and its shares were trading on a premium till February of this year. Since then the shares are trading on a discount meaning that one share is cheaper than the amount of Bitcoin it represents. The higher annual management fees of 2%, a six-months lock-up period, and the approval of Bitcoin spot ETFs in Canada additionally decreased the demand for GBTC's shares.

The application for a Bitcoin ETF is expected to reduce the fees and in doing so to increase demand. According to an anonymous person close to the matter, the investment firm's move could be an attempt "to force the SEC's hand."

"If they are comfortable with Bitcoin futures, regulators should also be comfortable with the underlying market, the thinking goes," the source told CNBC.

Militsa Dimitrova

Crypto Enthusiast

Militsa Dimitrova is a crypto enthusiast with experience in content creation & social media, who produces her own Cryptocurrency Newsletter and Podcast both in English and Bulgarian. She joined FXCM as an Accountant in 2020, after obtaining a Bachelor's degree in Accounting from the University of National and World Economy of Sofia.

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