BTC Breaks through 3.5 and Stabilizes at $34,000, to Understand the Regulatory Trends in the Crypto World in October

Since October, good news on cryptocurrency regulation has continued to emerge, and various unofficial news have affected the emotions of crypto investors. SEC’s’ revocation of Ripple, Grayscale converting GBTC as well as BlackRock spot Bitcoin ETF applications and approvals came one after another, and crypto assets responded strongly to these. Bitcoin led the way in gains, and other mainstream currencies also performed brilliantly driven by the overall sentiment. Bitcoin (BTC) has continuously broken through key points upwards, currently touching $35,000 and holding steady at $34,000. It has risen 14.44% in the 24 hours since writing this article and has risen 108.65% this year.

Mainstream Cryptocurrencies Price(2023.10.24), Source: Coinmarketcap.

Since the collapse of LUNA in the middle of last year and the bankruptcy of FTX at the end of the year, the sentiment of the crypto market has been sluggish, and the activity of market investment transactions and on-chain activities has been hit. The recovery of the market requires strong emotional stimulation. The wave of gains in cryptocurrencies since October has undoubtedly been driven by news about crypto regulation. Therefore, let’s take a look at the major events that have occurred this month.

BlackRock Bitcoin Spot ETF Approval True or False

• On October 16, Cointelegraph released news that BlackRock’s iShares spot ETF had been approved. In response, BTC rose 10% to US$30,000 before falling back, and nearly US$100 million in contract positions were liquidated. Although the news was quickly disproven within a few hours, market sentiment was ignited and BTC rose to the level of $28,500.

  
  

• On October 24, BlackRock’s iShares spot Bitcoin appeared on the list of DTCC (a company that provides trading clearing services for Nasdaq) under the ticker IBTC, market analysis interprets it as very likely to be approved by the SEC. BTC quickly rose to $35,000, reaching an 18-month high. It rose by more than 14% in 24 hours and by more than 22% in 7 days.

  
  

• On the evening of October 24, DTCC removed BlackRock IBTC from the web page and relisted it in the early morning of the next day, causing short-term fluctuations in the crypto market. BTC fell below $33,400 and then stabilized at $34,000. The entire network was liquidated to $46.76 million, long position accounting for 88%.

  
  

SEC Drops Its Lawsuit Against Ripple, Settling with Three Wins in Three Years

• Three years of Ripple’s fight with the SEC lawsuit. In December 2020, the SEC accused Ripple of selling XRP to conduct an unregistered securities offering and raise more than $1.3 billion. On July 13, 2023, the court ruled that the Ripple case was partially illegal, ruling that the sale of XRP on public exchanges was not an unregistered securities issuance, that is, "programmed sales" in the form of order books did not constitute an illegal act; $728.9 million XRP sales to hedge funds and other institutions were classified as a security, which means that “institutional sales” of tokens to institutions are illegal. On October 4, the SEC filed an interlocutory appeal request but was rejected by the court.

  
  

• On October 20, the SEC dropped its charges against Ripple. XRP rose by nearly 10% in 24 hours, and BTC also rose by more than 5%.

  
  

Grayscale GBTC Conversion ETF Wins 

• On October 23, Grayscale once again submitted the S-3 document, intending to convert GBTC into a spot Bitcoin ETF and obtain a CUSIP number, which is regarded as the U.S. Securities Unified Identification Code; and plans to seek Seed Capital (the purpose of the funds is new When an ETF is launched, the issuing company purchases the underlying assets itself to meet future needs).

  
  

• On October 24, the court officially made a ruling on the case between Grayscale and the SEC, ruling that Grayscale won the case and returned the Bitcoin ETF approval power to the SEC. Grayscale said the team looks forward to constructive cooperation with the SEC. GBTC discount narrowed to -11.03%, the highest since August 2021. The entire network's positions were liquidated to US$341 million, of which short positions were liquidated to US$271 million.

  
  

Spot Ethereum ETF Is Advancing in an Orderly Manner

• On October 20, Invesco and Galaxy filed documents for a spot Ethereum ETF through CBOE.

  
  

• On October 24, Nate Geraci, president of The ETF Store stated that the SEC has confirmed the registration of Grayscale Spot Ethereum ETF.

Bloomberg ETF analyst Eric Balchunas said BlackRock has either received the green light or was simply forecasting and preparing for everything. Lolli CEO Alex Adelman commented that if the Bitcoin ETF were approved, the cryptocurrency could see a historic rise. According to calculations by Galaxy Research, the target market size of the spot Bitcoin ETF reached US$14 trillion in the first year, US$26 trillion in the second year, and US$39 trillion in the third year.

The market is generally optimistic about recent regulatory developments, although there are some cautious voices, such as further discussions on institutional sales in the Ripple case, the SEC's withdrawal of the lawsuit against Ripple may mean advancing the next step of litigation, and the Grayscale GBTC conversion decision still handed over to the SEC, Seed Capital should not be over-interpreted, etc., but the confidence and FOMO sentiment brought about by supervision at this stage are spreading widely.

Gio Viciioso, CME cryptocurrency director, said that the market has great expectations for the approval of spot Bitcoin ETFs, not only from retail investors but also from diversified participants such as hedge funds and banks; although it is still early for the cryptocurrency spring, the market The momentum shows investors are getting ready.

BTC/USDT 1-day chart, Source: TradingView.

The increase of the current round after mid-October cryptocurrency was mainly reflected in the increase in Bitcoin, and other crypto assets also performed well driven by sentiment. Data shows that the crypto market value has increased by 14.22% since this month, and Bitcoin has increased by 22.71%. Ethereum rose 5.71%, and the S&P broad digital currency indicator SPCBDM rose 11.71%. In addition to gold 6.10%, it was much higher than the S&P 500 -1.66%, the Nasdaq composite value -1.52%, the Dow Jones Industrial Average -1.70%, and crude oil -5.19% or -5.63 %.

Mainstream Crypto Assets and Traditional Assets, Source: MacroMicro.

SPCBDM Trend Chart, Source: S&P Group.

After the Fear and Greed Index broke through the 50 level, there was a significant increase. The current value is 72, reaching the highest value two years ago.

Fear and Greed Index, Source: Alternative.me.

Since the beginning of this year, the prices of cryptocurrency-related funds or ETFs have generally shown an upward trend. The marginal increase has accelerated since mid-October. The holdings of ETFs represented by Purpose's BTCC have increased rapidly, showing that the attractiveness of ETF products has increased.

Price of Crypto Funds& ETFs, Source: MacroMicro.

BTCC Open Interest, Source: OKLink.

• Valuation Indicator: MVRV shows that Bitcoin is undervalued and is gradually rising upwards.

The Bitcoin MVRV (market value to realized value) indicator is an indicator that measures the deviation of the BTC market value from the realized value. MVRV-Z is (circulation market value - realized market value)/circulation market value standard deviation. According to historical experience, when MVRV is <1, Bitcoin is severely undervalued; when MVRV is between 4 and 5, Bitcoin is severely overvalued. The trend of MVRV is similar to that of Bitcoin price. Recently, the indicator has risen sharply, with a value of only 0.67. It is seriously undervalued, and there is a lot of room for repair in the future valuation.

Bitcoin MVRV-Z Score, Source: MacroMicro.

• Pressure Indicator: Bitcoin CDD shows no signs of rising centrally, and there is little pressure for profitable selling.

Coin Days Destroyed (CDD) reflects the collective action of long-term holders. The amount moved on the Bitcoin chain is multiplied by the number of days held since the last move. A high CDD indicator indicates that long-term currency holders have profited from selling. The indicator Low indicates that daily retail trading dominates. Looking at the trend, the CDD indicator is currently experiencing intensified fluctuations but has not shown an upward movement in the center. Long-term holders are not likely to make a profit and ship.

Bitcoin CDD, Source: CryptoQuant.

• Cycle Indicator: In an underestimation cycle, and historically there is a possibility of upward revision to a fair value cycle.

The Bitcoin cycle indicator has a shape similar to the rainbow chart. By integrating the CDD indicator and price, the valuation position of Bitcoin price within the cycle can be roughly measured. Historically, Bitcoin price has shown a certain cyclical pattern, which occurs once every four years and is consistent with Bitcoin, relating to the currency halving event. The indicator is currently at an undervalued position and has slightly broken upwards through the "undervalued level" and is approaching the "fair value level", which historically has tended to reveal price increases.

BTC Cycle Master, Source: Look into bitcoin.

• On-chain Activities: The total amount of TVL stopped falling and rebounded, and on-chain activities became active.

The total TVL can measure the participation of DeFi users. The higher the value, the higher the activity on the chain. The current total TVL of Ethereum is 22.15 billion US dollars. It has risen rapidly since the fake news of BlackRock Bitcoin ETF. The rebound in cryptocurrency prices is reviving the use and interaction of crypto users in on-chain projects.

DeFi TVL, Source: MacroMicro.

DeFi TVL, Source: Defillma.

• On-Chain Activity: Bitcoin-Puell Multiple suggests miner profit momentum upside.

The Bitcoin-Piller multiplier refers to the ratio of the current miner revenue to the average of the past 365 days. It is used to evaluate the miner's income. When the indicator is less than 1, it indicates that the miner's profit growth is insufficient; when the indicator is greater than 1, it indicates that there is an expansion of investment. The motivation for mining rises. The current Bitcoin-Peel multiplier fluctuates upward and is greater than 1, and there is strong support for on-chain activities.

Bitcoin-Puell Multiple, Source: MacroMicro.

Cryptocurrency regulation continues to release positive signals. Although most of them are disseminated through unofficial channels, its driving force on cryptocurrency prices is indeed obvious, and it also shows that current investors have strong expectations for the implementation of regulatory policies. How long this rebound can last remains to be seen as we go along. We still need to be alert at any time to sudden changes in the direction of events such as DTCC deleting or re-adding IBTC to the list.