First Mover Asia: Bitcoin Hovers Near $30.3K After Expected Correction. Retail Investor Enthusiasm 'Likely to Increase': Analyst

The rising flows into Toronto-based Purpose’s spot bitcoin ETF, which received approval by Canadian regulators in 2021, reflect strong appetite among retail investors for these types of products and are a promising sign for U.S. companies who have recently filed spot BTC applications with the SEC.

AccessTimeIconJul 17, 2023 at 1:25 a.m. UTC
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Good morning. Here’s what’s happening:

Prices: Positive events spurred a crypto market boost and altcoin rally, although the subsequent corrections were to be expected, a crypto fund manager said. BTC is holding comfortably above $30K.

Insights: The robust influx into Toronto's Purpose Bitcoin ETF indicates a high retail demand for such products, signaling promise for U.S. companies with pending BTC applications with the SEC.

Prices

1,268
−4.5 0.4%
$30,298
+11.7 0.0%
$1,927
−5.2 0.3%
S&P 500
4,505.42
−4.6 0.1%
Gold
$1,958
−2.5 0.1%
Nikkei 225
32,391.26
−28.1 0.1%
BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)
CoinDesk Market Index (CMI)
1,268 −4.5 0.4%
Bitcoin (BTC)
$30,298 +11.7 0.0%
Ethereum (ETH)
$1,927 −5.2 0.3%
S&P 500
4,505.42 −4.6 0.1%
Gold
$1,958 −2.5 0.1%
Nikkei 225
32,391.26 −28.1 0.1%
BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)

Bitcoin Holds Steady Above $30K

As Asia begins its business week, bitcoin is maintaining its position above $30,000, though ether has dipped below the $2,000 mark.

The world’s largest digital asset is currently at $30,298, flat over the last 24 hours, according to CoinDesk data, while ether is also changing hands sideways at $1,927.

Last week’s unexpected rally in crypto prices came from a favorable ruling a court handed down in the Ripple-SEC case, but Joe DiPasquale, CEO of crypto fund manager BitBull Capital, said in a note that after the market overheated and “corrections are to be expected”.

DiPasquale wrote that if there is a correction, “we are unlikely to see Bitcoin trading below $27K for long” and the “market is likely to consolidate around the current zone for now.”

The question is, where does the market go from here? Last week was already a busy week with the scheduled economic data releases, and became even more so with market movement from the XRP-led altcoin rally.

“Looking ahead, with no major scheduled events or economic data releases this week, we anticipate that price action in the market will be influenced by open interest levels, reflecting trader sentiment, and trending topics such as memes and artificial intelligence,” Johnny Teng, Senior Researcher at LBank Labs, said in a note. “As retail traders may have missed out on last week's price movement, their enthusiasm to participate in the market is likely to increase.”

Currently, despite fewer short positions, Bitcoin's price is expected to dip and then rise due to nearby short-term liquidity and resistance, Teng explained, while ether and other altcoins' trading volumes are set to increase.

Data from Coinglass shows that the number of short positions are climbing steadily in the early hours of Asia’s Monday business day, with $21 million in long positions liquidated in the last 12 hours versus $8.21 million in short positions.

This could be part of a consolidation move to maintain bitcoin at the $30,000 mark, instead of allowing it to breakaway and move upwards.

Biggest Gainers

Asset Ticker Returns DACS Sector
Stellar XLM +4.5% Smart Contract Platform
XRP XRP +4.5% Currency
Solana SOL +1.0% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector
Polygon MATIC −3.8% Smart Contract Platform
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Avalanche AVAX −3.5% Smart Contract Platform

Insights

What Do Rising Flows Into Purpose’s Spot Bitcoin ETF Mean?

An approval of a spot bitcoin ETF by the Securities and Exchange Commission (SEC) is looking likely, and an optimistic market means bitcoin is rallying.

If – or when – the SEC finally approves a spot bitcoin ETF it won't be the world’s first, however. That honor goes to Ontario, Canada, where Purpose Investments holds the title of having the world’s first bitcoin ETF, being approved by the Ontario Securities Commission in 2021.

Glassnode flow data shows that investors continue to pile into Purpose’s bitcoin ETF, BTCC, with a next 5638 BTC moving in the ETF in June and July. This growth has not only given Purpose a head-start on potential competition, but more importantly, strongly suggests a voracious appetite among average investors for a spot ETF bitcoin product.

(Glassnode)
(Glassnode)

Data from Factset shows that BTCC, the largest of Ontario’s bitcoin ETFs, is almost entirely held by retail traders, with only 0.03% institutional ownership – one single firm called Yorkville Asset Management.

With these two data points, it’s safe to say that retail enthusiasm for bitcoin as an ETF-grade asset is vibrant. Being a first mover has a significant advantage.

Almost all Canadian brokerages have access to U.S. listed stocks, while U.S. availability of Canadian stocks is limited. Or, one can put it like this: Canadians could easily ditch Toronto-listed BTCC and buy U.S. spot bitcoin ETFs, but American retail traders aren’t really buying up north.

Which is why this continued fund flow is interesting. It demonstrates that there’s a huge advantage for being first in this market, as the customer base isn’t likely going to be moving to the competition. Rather, they are buying more.

During a recent interview on ETF.com’s Exchange Traded Fridays, 21Shares’ Ophelia Snyder spoke about this first-mover advantage.

Within the market for bitcoin futures ETFs, “the difference between the first market and the second market was a couple of days, and the first-place product has about a billion dollars in assets, while the second place has less than 100 million,” she said.

Nobody expects a Toronto-listed ETF to have larger assets under management than a U.S. counterpart. But with $852.5 million USD ($1.1 billion CAD) in AUM, Purpose’s BTCC is no slouch, and it's still growing.

Yet Purpose’s first-mover advantage is hardly likely to be winner-take-all.

Important events.

10 a.m. HKT/SGT(2 a.m. UTC): China Gross Domestic Project (June/MoM/YoY)

10 a.m. HKT/SGT(2 a.m. UTC): China Industrial Production (June/YoY)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

XRP’s price has skyrocketed, after a U.S. judge ruled the sale of XRP tokens on exchanges did not constitute investment contracts. Willkie Farr & Gallagher LLP Counsel Michael Selig and attorney Alex Damsker shared their respective legal opinions on Ripple's partial victory in its fight with the U.S. Securities and Exchange Commission (SEC). CoinRoutes CEO and co-founder Dave Weisberger discussed his crypto markets analysis. And, Arkham founder and CEO Miguel Morel addresses concerns from privacy-focused crypto advocates after announcing a new crypto data marketplace.

Headlines

Crypto Distress Prompts Fir Tree, a Hedge Fund, to Seek Profit From Turmoil: “Fir Tree is at its best when we identify opportunities that are mispriced, dislocated or complex. Rarely do we encounter situations that are all three, but that is precisely what we are seeing in digital assets right now,” Fir Tree said.

XRP Moves Into the Weekly Spotlight, Dwarfing Other Crypto Assets: Along with XRP’s strong week, 172 of 186 CoinDesk Indices assets finished in positive territory.

Ripple's Legal Win Means It's Time for Crypto to Stand Up to the SEC: The company's partial victory in court is a watershed moment for the crypto regulatory fight, ConsenSys Director of Global Regulatory Matters Bill Hughes argues.

Hollywood’s Angry Creators Show Why Web3 Is Needed: Web2 economics don’t work for artists and writers, says CoinDesk's Michael Casey.

Transparency for the Whales, Privacy for the Plebs: Identifying the owners of crypto wallets may level the playing field for retail traders. But if taken too far it could be weaponized against the weak.

This article was written and edited by CoinDesk journalists with the sole purpose of informing the reader with accurate information. If you click on a link from Glassnode, CoinDesk may earn a commission. For more, see our Ethics Policy.

Edited by James Rubin.




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