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On Tuesday (February 2), Bitcoin rose steadily to around $35,000, while the second largest cryptocurrency Ethereum hit a new high, rising more than 12%, once reaching an all-time high of $1,491. (Bitcoin price chart, source: Coindesk) (Ethereum price chart, source: Coindesk)
Bitcoin on-chain indicators show that demand continues to outstrip supply, while the number of bitcoins on exchanges is falling, a sign of expectations for higher prices. Greyscale, the largest bitcoin fund, acquired 40,000 bitcoins, while only 26,000 were mined during the same period.
Various catalysts have been proposed, from supportive comments from Elon Musk to continued interest from institutional investors, to “bullish” outflows from Coinbase to Reddit/WSB investors showing some interest.
“With investment trading platform Robinhood halting trading in certain assets like GameStop and Nokia, and Nasdaq President and CEO Adena Friedman calling for regulations to prevent retail investors from coordinating on social media, the case for cryptocurrencies is only growing stronger,” Nicholas Pelecanos, head of trading at NEM Ventures, believes.
CryptoQuant CEO said that Coinbase recently saw an outflow of 15,200 Bitcoins, which shows that institutions are accumulating funds for Bitcoin's next bull run. "Since prices are ultimately determined by exchanges, a large amount of non-exchange trading volume is seen as a bullish signal. These transactions include over-the-counter transactions."
(Source: CryptoQuant)
A director of the Financial Crimes Enforcement Network (FinCEN) has spoken publicly for the first time about the controversial crypto wallet rule proposed late last year. FinCEN Deputy Director Michael Mosier said the rule, which would increase reporting requirements for exchanges, is intended to bring cryptocurrencies into line with conventional regulations related to cash. "This is a proposal, it's not all or nothing. Tell us what is technically and conceptually feasible and what is not feasible." But others have pointed out that increasing the amount of identifiable information associated with specific accounts on the blockchain would actually weaken the cash nature of cryptocurrencies.
On the institutional side, Bitcoin index fund provider Bitwise Asset Management is seeking regulatory approval to allow its Bitcoin fund shares to be publicly traded in the over-the-counter (OTC) market. According to a press release issued on Tuesday, the company has submitted 211 Bitcoin fund applications to the U.S. Financial Industry Regulatory Authority (FINRA).
In order to compete with Bitcoin investment vehicles such as Greyscale Investments and Galaxy Digital, the company plans to make its fund's shares publicly traded on the OTCQX market in New York. Fidelity Investments will oversee the custody of the fund's Bitcoin assets. According to the press release, if approved by the U.S. Financial Industry Regulatory Authority, Bitwise Fund shares will be tradable in traditional brokerage accounts and can be held by traditional custodians. "Professional investors have shown a significant increase in interest in using Bitcoin as a hedge against rising inflation risks," said Matt Hougan, chief investment officer of Bitwise.
Hogan added that more financial advisors are “noticing” the large allocations to Bitcoin by hedge funds, institutions and insurance companies and may take action to invest of their own. The fund offers an expense ratio of 1.5%, which is lower than the 2.0% expense ratio of Grayscale’s Bitcoin Trust (GBTC), the firm said. If approved, the Bitwise Bitcoin Fund would become the second Bitwise fund to be approved for listing following the firm’s successful approval of its Bitwise 10 Crypto Index Fund last December.
On the corporate side, MicroStrategy (MSTR) continues to buy large amounts of Bitcoin. According to a filing on Tuesday, the business intelligence company added 295 Bitcoins. This is the second $10 million transaction this year. Less than two weeks ago, MicroStrategy bought 314 Bitcoins. MicroStrategy's recent purchase transaction averaged $33,810. In last week's earnings call, the company's CEO Michael Saylor said the company will "continue to actively manage" its balance sheet and "gradually acquire more Bitcoin at prices that may continue to rise." (FX168 Financial Network)
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