How U.S. spot Bitcoin ETFs performed in the first days of trading

In this week’s crypto highlights, we explore the price movements of BTC, SUI, CHZ, and LDO. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Market spotlight: First results from U.S. spot Bitcoin ETFs

On January 10, the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin exchange-traded funds (ETFs), and they began trading the following day. But not without a little drama.

While Robinhood and other market participants wanted to offer spot Bitcoin ETFs “as soon as possible,” the second-largest asset manager Vanguard said it won’t allow its users to trade them. There were also numerous rumors that UBS, Citi, Edward Jones, and Merrill Lynch might follow Vanguard’s lead. Citi and UBS then reportedly said they would open access to spot Bitcoin ETFs. 

Some users were not happy with what they view as babysitting, and moved to Fidelity and other more crypto-friendly competitors. All this tension aside, here are spot Bitcoin ETF results from the first three trading days (January 11-16), and a few takeaways:

• Spot Bitcoin ETFs saw almost $10 billion in total trading volume, with Grayscale’s GBTC accounting for more than half. On day one, new products showed $4.6 billion in volume, but this figure decreased over consecutive days.
• Grayscale predominantly faced outflows, resulting in around $1.17 billion leaving GBTC in the first three days. Other asset managers typically saw inflows, with BlackRock, Fidelity, Bitwise, and Ark 21Shares taking the largest portions. In general, U.S. spot Bitcoin ETFs faced more inflows than outflows.
• According to CoinShares, digital asset funds saw the largest inflows in more than two years, but they did not break the record set at the launch of futures-based Bitcoin ETFs in October 2021. Some European and Canadian funds reportedly saw outflows arguably in favor of U.S. products.
• Most issuers of fresh U.S. spot Bitcoin ETFs now hold more than 1,000 BTC, with BlackRock accumulating over 16,000 BTC. GBTC, which was originally launched in 2013, currently holds around 606,000 BTC.
• Most U.S. spot Bitcoin ETF shares dropped in price by over 10%.

Disappointment?

In covering the results of a third trading day, Bloomberg’s ETF analyst Eric Balchunas said that spot Bitcoin ETFs saw three times more trading volume in a day, than the 500 ETFs launched in 2023 combined. That’s quite impressive, however people seem to be more focused on inflows.

Shortly before the SEC’s approval, some experts argued that BlackRock alone could attract $3 billion in its first trading day. There were also claims predicting $2-4 billion in inflows in the first two days. Others anticipated inflows of $50 billion to $100 billion to Bitcoin ETFs this year. However, over the first three trading days, net inflows (it’s a lagging metric) in all spot Bitcoin ETF funds were around $782 million. So there may be some performance disappointment.

As we mentioned earlier, loud statements could trigger a scenario where frustration with ETF launch results temporarily pushes Bitcoin’s price lower.

Escaping Grayscale

As GBTC dominates in trading volume and outflows compete with others’ inflows, it might seem like the main effect of ETF approval was the ability to move money out of Grayscale, rather than to put money into ETFs. At least, it looks that way right now. 

For most of its history, GBTC’s standout feature has been the ability to put Bitcoins in, without the opportunity to take them out. Grayscale has wanted to offer withdrawals to its users for a long time, which is why it battled with the SEC to convert its trust into a spot Bitcoin ETF. And now, GBTC, which accumulated over 26 billion in Bitcoin, allows people to withdraw.

It’s an open question as to how many more assets under management are going to leave Grayscale, either for users to fix potential profits, or to move to competitors with lower fees.

Other noteworthy market events

Circle filed for IPO in the U.S.

Circle, the issuer of the second-largest USDC stablecoin, confidentially submitted paperwork for an initial public offering (IPO) in the U.S., aiming to become a publicly-traded company. Details regarding the number of shares to be offered, and the expected pricing range are currently undisclosed (make it $1 per share, just for fun!).

CEO Jeremy Allaire emphasized that going public is a fundamental strategy for Circle, which is focused on enhancing trust and transparency within the firm. This IPO filing follows a prior attempt in 2022, when Circle pursued public listing through a merger with a special purpose acquisition company. The deal was subsequently terminated.

TUSD depegged amid reserve concerns  

Over the last week, some crypto community members speculated that the TrueUSD (TUSD) stablecoin was not so “true.”

On January 15, the TUSD stablecoin fell below its $1 peg by over 1%. The event coincided with an unusually high volume of TUSD selling on Binance. At a certain point, Binance traders sold $451 million worth of TUSD, and bought approximately $300 million TUSD, in a day. This suggests around $151 million in net selling pressure.

According to the Protos report, the stablecoin’s attestation system showed several errors in its API, and was unable to calculate the dollar value of its collateral assets. This sparked community concerns about the state of TUSD’s reserves. 

In response, the TUSD team said that “regular attestations are ongoing,” and that “short-term arbitrage opportunities” might be associated with Binance Launchpool activities.

A $15 billion XRP transfer turned out to be a failed exploit

On January 14, a blockchain-tracking X (formerly Twitter) Whale Alert account reported a 25.6 billion XRP transaction in a now-deleted tweet. That amount is nearly half of XRP circulating supply, and the allegation was movement of that supply from an unknown wallet to Bitfinex. The Whale Alert team later deleted the post, stating that there was an issue with proper reading of the Ripple node response.

The transfer did actually exist, however it was just for a few cents worth of XRP. The Bithomp blockchain explorer showed the transaction failed, as the sender “did not have enough liquidity.” 

According to Bitfinex’s Chief Technology Officer Paolo Ardoino, the idea was seemingly to trick Bitfinex into accepting a large transfer as real, which could have possibly opened the door to a hack. Ardoino explained that this was a “partial payments exploit” attempt, and the attacker assumed that the exchange’s software was not configured correctly to process such transactions. 

The attacker reportedly tried this same trick with other exchanges as well. According to blockchain data, they attempted to transfer 58.9 billion XRP on Binance, but this transaction failed similarly.

One sentence news

• The U.S. Internal Revenue Service (IRS) paused its $10,000 cryptocurrency reporting rule for businesses and professional traders. 
• CoinShares exercised an option to acquire Valkyrie Funds, an issuer of a recently approved U.S. spot Bitcoin ETF.
• Venezuela pulled the plug on its Petro cryptocurrency, ending a five-year experiment.
• X (formerly Twitter) no longer supports NFT profile pictures.
• During an AMA session on Reddit, Ethereum co-founder Vitalik Buterin considered an increase of the network gas limit to 40 million, from the current 30 million (+33%), to boost throughput.
• The Fantom Foundation announced that it had reduced the validator staking requirement from 500,000 FTM, to 50,000 FTM tokens, or by 90%, following a governance vote.

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Notable price performances

Bitcoin price may have reached a pre-halving rally peak

On the first trading day of U.S. spot Bitcoin ETFs, Bitcoin’s price temporarily jumped to $49,000, and then dropped below $42,000. At the time of this writing, the asset was predominantly moving sideways, between $42,000 and $43,000 over the last week. 

According to Glassnode, the recent drop could be associated with profit-taking made by long-term holders, and “overheated” open interest in long positions on derivatives markets. CryptoQuant also reported that price correction has the potential to continue, as “several on-chain metrics and indicators suggest that a new rally could not be in the cards.”

With the latest jump to $49,000, the BTC price also reached the upper border of a downside Ichimoku Cloud, which we first covered a few months ago. This level identified the peak of a pre-halving price rally in two previous cycles, suggesting that Bitcoin price could potentially experience correction until halving in mid-April. Back in November, we highlighted $36,000, as a potential halving target based on performance in previous cycles.

In addition, the daily RSI is currently moving inside a downtrend, entering a negative zone. However, it hasn’t yet reached the oversold zone, meaning there still could be room for price correction.

SUI price rallied amid a TVL surge

The SUI price became one of the top climbers, showing an almost 25% weekly, and 100% monthly increase, respectively. Notably, the network’s total value locked showed similar performance within said periods.

As a step to bolster its ecosystem, Sui recently joined forces with Stork, an off-chain data feed oracle. Stork will supply real-time pricing data to application developers, decentralized exchanges (DEXs), and lending protocols that operate on Sui’s blockchain.

The asset reached the overbought zone on a daily chart, and formed a bearish divergence with RSI on a four-hour timeframe. This suggests that SUI could experience price consolidation, or even correction, in the short term.

CHZ price jumped following M&A anticipation

On January 9, CHZ, the native token of the Chiliz network used to purchase Fan tokens on Socios.com, bounced off the 200-day SMA, showing gradually increasing trading volume. 

On January 16, its trading volume more than quadrupled after Alexandre Dreyfus, the CEO of Chiliz, said the project “will look at some aggressive M&A in 2024.” This helped CHZ join the top climbers club this week, showing a more than 20% price increase.

However, the asset has already started to experience a correction, moving below the 0.236 Fibonacci point. This price decline was accompanied by decreasing volume, suggesting that bulls might still have an upper hand. However, the asset may first need to retest the 50-day SMA (orange line).

LDO dropped by 15%, after a month-long rally

From December 19, 2023, to January 11, 2024, the LDO price doubled, moving to $4. The asset formed a bearish divergence with RSI on a daily chart, and a price correction followed. Starting January 11, LDO dropped by over 15%, resulting in one of the largest weekly declines among the top 100 digital assets by market cap.

As a result, the asset approached the 20-day EMA, which currently acts as a dynamic support. The Awesome Oscillator (AO) on a four-hour timeframe suggests that the price could rebound from the 20-day EMA, or the 0.382 Fibonacci point, as a bullish divergence was formed. In this case, the asset could retest $3.42. But if the 0.382 Fibonacci point is broken, bears could potentially push the price to $2.73, or even an ascending support line (white line).

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