Market Wrap: From GBTC Discount to Short Bitcoin ETF, Traders See Reasons for Optimism

Hi, I'm Bradley Keoun, here to take you through the day's crypto market highlights and news.

Bitcoin (BTC) held steady at about $21,000 in Friday afternoon trading.

The largest cryptocurrency by market capitalization was recently trading at $21,030, up 3% over the past 24 hours. This weekend, however, could pose another test for bitcoin, analysts say, as reported by Jimmy He.

“This weekend could be another testing period for the cryptocurrency, despite the resilience shown this week in holding back above such a major level,” Oanda senior market analyst Craig Erlam said. “The support still looks shaky below and another break could see confidence in the space really put to the test.”

Despite the continuing shakeout in the crypto industry, analysts were eyeing key market indicators for signs that prices might have hit a bottom. Those include a narrowing in the so-called Grayscale discount (read more on that below by Lyllah Ledesma) and – in a perverse twist of logic – data showing stock investors piling into an exchange-traded fund designed to profit from further declines in the price bitcoin, as reported by Krisztian Sandor.

"The quote-unquote, relief rally that you've seen in the last 24 hours, I think it's largely stemming from the retail side of things," Raghu Yarlagadda, CEO and co-founder of FalconX, a crypto trading platform for institutional investors, said Friday on CoinDesk TV's "First Mover" program.

In traditional markets, stocks rallied after a University of Michigan survey showed that consumers tempered their expectations for future inflation compared with the prior reading – seen by traders as a reason to worry less that those expectations might become a self-fulfilling prophecy.

Latest prices

●Bitcoin (BTC): $21,313 +2.01%

●Ether (ETH): $1,241 +9.50%

●S&P 500 daily close: 3,911.74 +3.06%

●Gold: $1,826 per troy ounce +0.02%

●Ten-year Treasury yield daily close: 3.13% 0.057

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

The "GBTC discount" narrows, and analysts ask why

By Lyllah Ledesma

A key metric known in crypto markets as the "Grayscale discount" is narrowing, possibly a sign of optimism on the part of some traders as the deadline approaches for the U.S. Securities and Exchange Commission to rule on a proposal to convert the Grayscale Bitcoin Trust – the world's largest cryptocurrency fund – into an exchange-traded fund.

The Grayscale Bitcoin Trust, which is often referred to by its stock trading symbol GBTC, is a type of investment vehicle that allows U.S. investors to gain exposure to price movements of BTC.

GBTC shares were recently trading at a discount of 29% to bitcoin’s price, according to data from Skew. That's down from 34% last week. The shares have been trading at a discount since February 2021; previously, the shares had traded at a premium to bitcoin's price.

It might be a sign of stock traders bottom-feeding for bitcoin at a discount, or it might be a sign that traders think the conversion will win approval. Or it might be a sign that fears of a deeper liquidity crisis across the crypto industry might have passed.

Read also: With Bitwise and Grayscale Decisions Looming, Spot Bitcoin ETF Approval Hopes Are Running Low

Altcoin roundup

• RUNE spikes: THORChain's native blockchain went live on seven supported networks after nearly four years of development, developers said in a post on Thursday. The network allows users to trade bitcoin for other supported assets without using bridges or wrapped assets. THORChain’s token, RUNE, surged 14% in the last 24 hours, outperforming bitcoin and ether. Read more here.
• Axie Infinity Developer to Reimburse Victims of Ronin Bridge Hack: Sky Mavis, the developer behind the popular play-to-earn online game Axie Infinity, said it will start to reimburse the victims of the $625 million Ronin bridge hack. A total of $216.5 million in USDC and ethereum at today's prices will be returned to users. Read more here.
• Cryptoys raises funds to bring NFTs to kids: Cryptoys, a platform aiming to "reimagine what a toy actually is," raised $23 million in funding from Andreessen Horowitz, Dapper Labs and Mattel. The platform, managed by non-fungible token (NFT) studio OnChain Studios, aims to bring NFTs to kids in the form of colorful characters. Read more here.

Relevant insight

• BlockFi Raises Deposit Rates, Eliminates Free Withdrawals: The rate increases across BTC, ETH, USDT and other crypto deposits come after layoffs at the company and a $250 million emergency line of credit from FTX.
• Investors Pile Into Short Bitcoin ETF Betting on Prices to Fall: ProShares' BITI exchange-traded fund raked in $11 million Thursday after a lackluster opening day.
• European Crypto Exchange Bitpanda Cuts Staff by Hundreds: Bitpanda announced it is reducing its employee count to 730 from about 1,000.
• FTX in Talks to Acquire Part of BlockFi: Report: FTX previously extended a $250 million emergency line of credit to the struggling crypto lender earlier this week.
• Flowdesk Raises $30M to Expand Trading and Market-Making Services: The French company will boost its flagship product to provide liquidity fund management services to cryptocurrency issuers.
• Convex Finance Sets Up New URLs After Website Address Is Hijacked: At least five wallets were affected in the front-end exploit. No funds on verified contracts were exploited.
• Binance Launches New Platform for VIP and Institutional Investors: The exchange’s release of Binance Institutional aligns with CEO Changpeng Zhao’s commitment to expand and hire during the bear market.
• Coinbase Users in the Netherlands to Face Additional KYC Hurdles When Pulling Crypto Off Platform: Starting on Monday, Coinbase customers in that country will have to supply key details about the transaction and the recipient when moving crypto out of the exchange.

Other markets

Most digital assets in the CoinDesk 20 ended the day higher.

Biggest Gainers

Asset Ticker Returns DACS Sector Polygon MATIC +13.6% Smart Contract Platform Solana SOL +11.7% Smart Contract Platform Avalanche AVAX +11.3% Smart Contract Platform

Biggest Losers

There are no losers in CoinDesk 20 today.`

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.