Welcome to the inaugural edition of the Greythorn Market Update. In an era where crypto matters more than ever, it’s essential to make an extra effort to ensure our readers remain well-informed about the evolving world of digital assets and blockchain technology.
At Greythorn, we’re committed to providing monthly updates, offering deep insights into the latest developments in the crypto markets and their intersection with the broader macroeconomic landscape.
Each edition will feature crucial metrics, in-depth analysis of adoption trends, shifts in market sentiment, updates on regulatory changes, and the latest news. Additionally, we’ll explore the evolving role of cryptocurrencies on the global stage, helping you stay ahead in this dynamic sector.
January marked a notable period for Bitcoin, with significant developments and fluctuations:
Strong Start to the Year
Bitcoin had an impressive beginning in January. On the evening of January 1st, the price began to surge, reaching over $45,800 by January 2nd. This level hadn’t been seen since April 2022, prior to the Terra ecosystem collapse and subsequent market turmoil.
Bitcoin’s 15th Anniversary
January 3rd was a milestone for Bitcoin, celebrating the 15th anniversary of mining the first Bitcoin, known as the Genesis Block or Block #0. This unique block, not linked to any preceding block, was generated by the Bitcoin protocol itself, marking the start of the blockchain. It also introduced 50 new bitcoins as a mining reward, symbolising the beginning of the Bitcoin journey.
This anniversary also served as a moment to reflect on Bitcoin’s ongoing innovation. The ecosystem saw accelerated developments, such as the introduction of Ordinals, fostering marketplaces for Bitcoin-based NFTs, and potential data storage applications. Advances in Bitcoin’s layer-2 solutions like Lightning and the potential of Bitcoin becoming a multi-asset network through Taproot Assets were also notable.
January Performance Overall
Even after the strong start of the year, Bitcoin’s performance in January was somewhat erratic, with the price moving sideways.
By January 8th, rumours about the SEC’s imminent approval of the first US Bitcoin spot ETF began circulating. It was suggested that BlackRock had prepared $2 billion from existing Bitcoin holders for this new ETF. However, on January 10th, an unusual event occurred when the SEC’s account was reportedly hacked, leading to a false announcement about the approval of several Bitcoin ETF listings.
Despite the confusion, the official confirmation from SEC Commissioner Hester Peirce came on January 11th. This prompted the anticipated “sell the news” event; however, the market remained in the sideways trading range that has been established since the start of December up to the present day.
ETF Launches and Market Impact
Following these events, BlackRock’s IBIT saw over $1 billion in volume on its first day, with several other ETFs like Fidelity’s FBTC, ARK/21 Shares’ ARKB, and Bitwise’s BITB also performing well. Including GBTC, a total of $4.3 billion was traded. Even WisdomTree’s BTCW, though less prominent, outperformed most new ETFs.
Source: Eric Balchuna
Contrary to some expectations, Bitcoin’s price did not surge following these developments. This was partly attributed to the already mentioned “sell the news” pressure and the likelihood that not all GBTC outflows were reinvested in Bitcoin, either in spot or through the ETFs. Many speculators, who had previously invested in GBTC, likely took profits, contributing to the subsequent price slump.
During this period, Ethereum began outperforming Bitcoin for the first time in a while. This shift was largely driven by crypto portfolio rotation from Bitcoin to Ethereum, amid speculation about upcoming Ethereum ETFs.
As the excitement around the ETFs subsided, Bitcoin’s price initially stagnated and then dropped, falling below $39,000 — a level not seen since early December. This downturn was primarily driven by GBTC exits. As investors began redeeming their holdings, significant outflows were observed from GBTC, with the steepest daily outflow recorded on the 22nd, totalling $640 million.
Despite these challenges, Bitcoin’s price showed resilience towards the end of January. The rate of GBTC outflows began to decrease, and by the 25th, they had reduced to $394 million. This slowdown, though still significant, marked the lowest outflow since the ETF launch day and indicated a potential stabilisation in the market.
Source: BitMEX Research
In conclusion, January was a pivotal time for Bitcoin, and as we look ahead, several important factors could shape the market. The US government is planning to sell a significant amount of seized Bitcoin, which could introduce some selling pressure. At the same time, the SEC has delayed a few Ethereum spot ETF proposals, FTX has sold roughly $1 billion worth of GBTC. Adding to the mix, there are reports that around 200,000 BTC from the Mt. Gox bankruptcy is set to be distributed over the next few months.
However, it’s also essential to recognize the growing interest in the market, with key metrics showing increased activity. Not to be overlooked is the upcoming Bitcoin halving, due in about half a year, which historically has signalled the start of a bull market. These developments combined suggest that the coming months will be both challenging and exciting for Bitcoin holders.
Also, Bitcoin’s risk level, previously at 0.6 amid the ETF event and GBTC outflows, has dropped but stays over 0.5, signalling moderate risk. Typically, Bitcoin is in the low-risk zone, rarely in medium (0.4–0.6) or high-risk (0.6–1) areas.
As we delve into 2024, it’s becoming evident that this year holds brighter prospects for crypto, particularly when compared to the challenges of 2023. Despite some concerns in the broader economic landscape, the crypto sector is embarking on a new phase of growth, a trend that’s obvious to anyone paying attention. The recent approval of ETFs is a significant milestone, signalling a renewed global willingness to embrace the potential of crypto to create meaningful impact.
To keep up with the latest trends and developments in the crypto market, I encourage you to connect with Greythorn. We are deeply engaged in the crypto industry, constantly sharing our insights and perspectives on various crypto sectors and the overall direction of the industry. For further information and to stay in the loop, here are the various ways you can reach out to us: