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Daily Bitcoin and Crypto Analysis

Daily BTC Analysis: The Weekender

May 9, 2021
Welcome to the Weekender: Your weekly round-up of all the top news stories, as chosen by you, our readers. This week, the top spot was taken by another story of mass crypto adoption.

According to CNBC, hundreds of banks in the U.S. will reportedly start offering access to Bitcoin to their customers this year, thanks to a partnership between Fidelity National Information Services and the New York Digital Investment Group. Hundreds of banks have enrolled to participate in the program as they see funds moving from bank accounts to crypto exchanges.

This will be made possible thanks to a partnership between fintech giant Fidelity National Information Services (FIS) and the New York Digital Investment Group (NYDIG), the Bitcoin investment arm of $10 billion New York-based Stone Ridge Asset Management. The two firms said that the collaboration's purpose is, “to enable U.S. banks to offer bitcoin in the coming months." FIS is a vendor to banks with nearly 300 million checking accounts.

Buying Bitcoin directly from you bank account? I can’t actually believe I just typed that.

Next up was the news that Hong Kong-based cryptocurrency exchange Crypto.com will sponsor the final of Italy’s soccer cup competition, Coppa Italia, taking place May 19 between Atalanta and Juventus.

The partnership with Lega Serie A is the first such agreement between a professional soccer league and a crypto platform, Crypto.com said.

To commemorate the event, a collection of non-fungible tokens (NFT) will be made available, featuring the trophy, match highlights and more…obviously.

Galaxy Digital, the billion-dollar crypto asset firm run by Mike Novogratz, has acquired digital asset custodian, BitGo.

The company detailed its plans to buy BitGo using stocks and cash. BitGo shareholders are due to receive 33.8 million Galaxy Digital common stock shares and $265 million in cash, which will come from Galaxy Digital’s balance sheet. That puts the total value at roughly $1.2 billion after factoring in GLXY’s share price at yesterday’s market close.

Novogratz stated that the acquisition would help his company in its goal to become an institutional hub in the digital assets space. He said: “The acquisition of BitGo establishes Galaxy Digital as a one-stop-shop for institutions and significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology.”

List on Nasdaq, own a custodian… if anyone from Coinbase or Galaxy is reading, we have also launched an exchange token that delivers amazing value to our users ;)

Finally, this week, we end with the news that Citi is considering launching crypto trading, financing, and custody services, according to the bank’s global head of foreign exchange, Itay Tuchman. “There are different options from our perspective and we are considering where we can best serve clients,” Tuchman said.

Citi would be the latest Wall Street bank to do so, after Morgan Stanley announced plans to allow wealthy clients access to Bitcoin funds in March. Bank of New York Mellon announced plans to store and manage Bitcoin a month earlier, and, just yesterday, Goldman Sachs announced it will offer Bitcoin derivatives to large investors.

I would say that’s a pretty impressive week of mass adoption.

Technical Analysis

It's been a battle this week, with the bulls just holding onto gains. Bitcoin has held above the key $56,600 level, but with the trading range expanding to $53,130/$58,820, we are far from settled.

A move back below $56,600 will see the lower end of the range tested again, with $54,200 the first stop before the critical support level of $53,130 can be challenged again. We saw the bulls' reactions to the last attempt by the bears to take us down through $53,130: It was explosive and paved the way for a return to $58,800.

The bears will be wary of this, and as such, it's likely any move lower will take longer than usual. On the upside, we will need to see another close above $56,600 and a push back to resistance at $58,800 to start believing that Bitcoin can trade with a $60,000 handle this week. Above $60,000, $61,700 is all that stands between Bitcoin and a new ATH.

Given this weekend's price action, it's looking like another week to buy dips and sell rallies, as we await confirmation of BTC's next big move.

This Weekend's Coffee Reading!

GBTC discount presents a unique challenge for Grayscale and investors

The Grayscale Bitcoin Trust continues to trade at a discount compared to BTC, a situation that presents a unique challenge to Grayscale and investors.

Since 2013 the Grayscale Bitcoin Trust Fund (GBTC) has offered its investors exposure to Bitcoin (BTC) through a publicly quoted private instrument. However, the trust's convertibility and liquidity vastly differ from an Exchange Traded Fund (ETF).

Trusts are structured as companies, at least in regulatory form, and are 'closed-end funds' which can initially only be sold to accredited investors. This means the number of available shares is limited, and retail traders can only access them via secondary markets. Furthermore, a GBTC share cannot be redeemed for the underlying BTC position.

Historically, GBTC used to trade above the equivalent BTC held by the fund, which was caused by the retail crowd's excess demand. The common practice for institutional clients was to buy shares directly from Grayscale at par and sell at a profit after the six-month lock-up period.

During most of 2020, GBTC shares traded at a premium to its Net Asset Value (NAV), which varied from 5% to 40%. However, this situation drastically changed in March 2021. The approval of two Bitcoin ETFs in Canada heavily contributed to extinguishing the GBTC premium.

ETF funds are less risky and cheaper compared to trusts. Moreover, there is no lock-up period, and retail investors can attain direct access to buy shares at par. Therefore, the emergence of a better Bitcoin investment vehicle seized much of allure that GBTC once possessed.

In late February, the GBTC premium entered adverse terrain, and holders began desperately flipping their positions to avoid getting stuck in an expensive and non-redeemable instrument. The situation deteriorated up to an 18% discount despite BTC price reaching an all-time high in mid-March.

On March 10, Digital Currency Group (DCG), Grayscale Investments' parent company, announced a plan to purchase up to $250 million of the outstanding GBTC shares. Although the conglomerate did not specify the reason behind the move, the excessive discount certainly would have pressured their reputation.

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