GBTC’s $2.2B Outflow Triggers Bearish Sentiment In BTC, ETH Options
The broader digital currency ecosystem remains on edge as market bulls fight to prop up Bitcoin (BTC) and Ethereum (ETH) prices amid Grayscale’s $2.2 billion GBTC outflows and conflicting Options data.
Is Bitcoin (BTC) and Ethereum (ETH) Bottom In?
At the time of writing, the duo of Bitcoin and Ethereum brandishes slightly conflicting price outlooks with the former growing by 0.58% to $41,784.51 and the latter slipping by 0.48% to $2,467.64. Despite this relatively stable price outlook, the conversations around potential price bottom settling are invalidated by Deribit Options data.
According to Insights from the platform, the GBTC-ETF wargames triggered a massive spike in Implied Volatility (IV) of Ethereum which dropped from 64% to 47% for the week using the Deribit Volatility (DVOL) proxy. Bitcoin also recorded a shrunken volatility featuring a drop from 55% to 47%, a trend powered by Call selling.
The implications of the IV for both Bitcoin and Ethereum differ slightly. Notably, the steep drop in Ethereum came with massive selling trades recorded for the coin as some traders not only gave up on Longs with other traders but also overwriting ETH Spot AUM.
Per the data presented, a total of 2,700 Calls sold about 45,000 ETH, and in March 2,900 Calls sold 28,000 ETH. This sustained selloff underscores the likelihood of a further drop in Ethereum shortly. Bitcoin on the other hand is witnessing intense accumulation as traders are leveraging the slump in prices to stack up the coin.
2) The most impactful IV selling trades originated on ETH, predominantly Call selling, some giving up on Longs, and some overwriting ETH Spot AUM.
Feb 2.7k Calls sold 45k
Mar 2.9k Calls sold 28k
Jan 2.6k covered to sell Apr 2.9k Calls 25k
Significant other Call 2way in Feb Calls. pic.twitter.com/8XU3djFRVV— Deribit Insights (@DeribitInsights) January 20, 2024
With this outlook, Ethereum’s bottom might be far from being set while Bitcoin’s drawdown might be clearing with the current accumulations.
Grayscale Shaping Market Sentiment
With the approval and launch of the spot Bitcoin ETF being the most important update from the US stock market, the dumping of Grayscale’s GBTC has shifted the longevity of Bitcoin in investors’ portfolios.
Data from the crypto analytics platform IntoTheBlock pegged the average time held of coins transacted to 9 months. For this timeframe, a total of 371,930 BTC was transacted with the average price pegged at $42,663.24.
While Grayscale’s influence is still dominant as one of the largest Bitcoin holders among the spot ETF issuers, the BTC holding timeline may shrink further as the firm’s 1.5% fee might serve as a discouragement for its existing holders to move their coins to other funds. If this selloff trend continues to play out, the spot and Options market volatility may continue for the rest of the month and price will also reflect this trend.
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