Bitcoin price stalls as Grayscale approaches SEC for options on spot BTC ETFs
- Bitcoin price uptrend has lost steam after a rejection from the supply zone between $62,905 and $68,212.
- BTC could drop 5% to $60,000 as part of a healthy correction to give sidelined investors a buying opportunity.
- A candlestick close below $60K could instigate and extend BTC fall to $50,000.
Bitcoin (BTC) price has recorded an impressive rally this week, recording milestones that merited BTC for headlines across crypto news sites and X. However, the rally has lost steam as the king of cryptocurrency now confronts a supply barrier.
Cryptocurrency metrics FAQs
What is circulating supply?
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
What is market capitalization?
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
What is trading volume?
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
What is funding rate?
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
Also Read: Bitcoin price rally not likely over as institutions deplete BTC OTC supply
Grayscale approaches SEC for options on spot Bitcoin ETFs
A Reuters report indicates that Grayscale Investments, a crypto asset manager and the issuer of the GBTC spot BTC exchange-traded fund (ETF), is lobbying the US Securities & Exchange Commission (SEC) to approve options on its spot BTC ETF — GBTC. According to Grayscale, this would open the ETF to a new class of investors.
Reuters cites a letter from Grayscale CEO Michael Sonnenshein, who described the SEC rejecting options on its Grayscale Bitcoin Trust (GBTC.P), as an unfair discrimination against its shareholders, adding that the regulator has previously approved options on ETFs tied to BTC futures.
"It is vital to the interests of GBTC and all spot Bitcoin [exchange-traded product] investors to access exchange-listed options on GBTC and other spot Bitcoin ETPs," wrote Sonnenshein, adding that spot BTC ETF options would enable price discovery in the new ETFs’ shares.
In principle, while the ETFs have opened cryptocurrency to more investors, options would allow holders to reserve the right to buy or sell at a predetermined price by a set date. Nevertheless, it is worth noting that considering BTC is deemed a commodity, the US Commodities Futures Trading Commission (CFTC) would also have to weigh in for an approval of spot BTC ETF options.
Bitcoin price outlook as BTC confronts a supply barrier
Bitcoin price tagged the supply zone between $62,905 and $68,212 on Wednesday but was rejected. The level to beat remains the mean threshold, $65,664, marking the midline of the order block. A break and close above it on the daily time frame would confirm the continuation of the trend.
With the supply zone holding as a resistance, the ongoing rejection could see Bitcoin price retest the $60,000 psychological level, giving sidelined and late investors an entry point. This would constitute a 5% slip below current levels.
Nevertheless, the thesis remains bullish as the market continues to favor the upside. This is seen with the northbound inclination of the Relative Strength Index (RSI), showing that momentum is still rising.
If Bitcoin price overcomes the $65,664 midline, BTC could retake its $69,000 all-time high for the first time since 2021.
BTC/USDT 1-day chart
On the other hand, if selling pressure continues, Bitcoin price could revisit the $60,000 threshold, or worse, extend a leg down to $50,000, where traders could buy the dip.
A daily candlestick close below $40,000 would invalidate the bullish thesis by producing a lower low.
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