Estimating Who The Largest BTC Sellers May Be
The Daily Crypto Update for Institutional Investors
The ‘New Nine’ BTC Spot ETFs Now Hold 294,382 BTC, Equivalent To USD 19.28B - In Today’s Note, We Estimate Who The Largest Sellers May Be In This Market
Some BTC 'HODLers' are taking profit since the 'new nine' launch: On January 11, the day the ETFs debuted, the proportion of BTC’s supply that remained unmoved for over a year stood at 70.27%. Since, this metric has declined to 68.72%, representing a cumulative transfer of ~452,403 BTC, or USD 15.06B, into supply that has been active over the past year. It remains highly unclear what percentage of the BTC that left the inactive supply has been sold. However, the metric’s decline suggests some investors who held for one year and over have decided to take profit. For context, BTC’s price one year ahead of the ETF’s debut, i.e. January 11, 2023 was USD ~17,700. This represents a 163% appreciation up to the day the ETFs began trading.
BTC blockchain data suggests miners have been selling: Based on data provided by Glassnode, estimates of BTC balances held by miners began declining in October of last year, when miners held 1,829,744 BTC. Since then, this balance is estimated to have declined by 17,443, or USD 775M. Miners are motivated to sell for a number of reasons. For instance, miners in some Chinese regions are known to bring online additional hardware during the wet season when hydro power becomes abundant. Conceivably, miners may sell during the dry season to counteract the inactivity of mining hardware. Miners may also be inclined to sell in order to better position ahead of the halving. This may involve purchasing more efficient mining equipment due to new economics the halving will bring. Expected to take place in late April, the halving will reduce the reward miners receive for adding new blocks to the blockchain from a current 6.25 BTC to 3.125 BTC.
The FTX bankruptcy estate sold USD 1B worth of GBTC: According to January reporting from CoinDesk, FTX's bankruptcy estate sold 22 million shares of GBTC, worth USD 1B. Earlier in February Genesis was given court approval to sell USD 1.3B worth of GBTC. Since its launch as an ETF, with USD ~25B in assets, GBTC has seen USD 7.59B worth of outflows. Late last month, JPMorgan wrote in a research report that selling pressure from investors taking profits from GBTC may largely be over. The report attributed BTC’s post-ETF launch sell-off to GBTC selling.
GBTC, launched in 2013, often traded at a discount or premium to its NAV due to the structure of the fund. This discount reached a low of ~51% in February of last year. GBTC’s discount ultimately became a proxy for the likelihood the SEC would allow it to convert into an ETF. The discount collapsed when GBTC was ‘uplisted’ to an ETF and its new structure allowed it to trade on par with its NAV.
CRYPTO HEADLINES
BlackRock’s spot BTC ETF (NASDAQ: IBIT) had inflows of USD 520M yesterday, the largest amount of any spot BTC ETF since inception. The fund took in the second most flows of all US-listed ETFs yesterday, behind the iShares Core S&P 500 ETF (NYSEARCA: IVV). According to Bloomberg ETF analyst Eric Balchunas, spot BTC ETFs yesterday had more individual trades than SPDR S&P 500 ETF Trust (NYSEARCA: SPY) and Invesco QQQ Trust Series 1 (NASDAQ: QQQ). - link - @EricBalchunas
US Senator Elizabeth Warren criticized the crypto industry for not adhering to traditional financial regulations, advocating for equal rules. In a Bloomberg TV interview, Warren expressed confusion over the industry's resistance to regulations aimed at curbing illicit activities. Last year, Warren introduced the Digital Asset Anti-Money Laundering Act, seeking to apply anti-money laundering laws to the crypto industry. - link - @CoinDesk
The Hong Kong Monetary Authority plans to launch a regulatory sandbox for stablecoin issuers. Announced by Financial Secretary Paul Chan, the project aims to allow firms to trial stablecoin projects, while ensuring security and investor protection. - link - @TheBlock
Crypto.com announced a partnership with LatAm investment bank BTG Pactual, through which it will list the bank’s stablecoin ‘BTG DOL.’ The partnership marks the launch of BTG DOL, which is described as being ‘backed 1:1 by the USD,’ and aims to promote trading pairs against assets on the exchange, including BTC and ETH. - link - @Crypto.com
Boutique investment bank Benchmark initiated coverage on MicroStrategy (NASDAQ: MSTR) with a buy rating and target price of USD 990 by end of 2025. The forecast hinges on MSTR’s BTC holdings and its business intelligence software, predicting BTC/USD to hit 125k driven by ETF approvals and the 2025 halving. - link - @TheBlock
BTC payments firm Strike is expanding to seven African countries, offering BTC and Lightning Network services to address financial challenges. The expansion aims to combat high inflation, currency devaluation, and costly remittance services in regions like Gabon, Ivory Coast, and South Africa. Users will benefit from local currency transactions, BTC trading, and cross-border payments. - link - @BitcoinMagazine
Backpack, a Solana-based crypto exchange, has raised USD 17M in Series A funding. Led by Placeholder VC, the round saw contributions from Hashed, Amber Group, among other investors, and gave the startup a USD 120M valuation. - link - @Cointelegraph
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CHART OF THE DAY
BTC miners face complex economics following the halving, which could account for their seeming selling ahead of the event. The block reward represents the larger portion of BTC miner revenue in comparison to fees. As discussed in the Story Of The Day, this block reward is set to reduce by half, from 6.25 to 3.125 BTC...
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FRNT: TSXV is an institutional capital markets and advisory platform focused on digital assets. FRNT aims to bridge the worlds of traditional and web-based finance. Business lines include deliverable trading services, structured derivative products, merchant banking, advisory, consulting and principal investments.