The recent Grayscale victory against the Securities Exchange Commission (SEC) was a driver for Bitcoin’s noteworthy price rise, which reached $28,000 at one point. The rapid price oscillations of BTC fueled by the Grayscale case showcase the interplay between crypto regulatory developments and market sentiments.
However, according to research firm Kaiko, “there was very little impact on trade volumes”.
The Grayscale ruling caused #BTC volatility to surge, but there was very little impact on trade volumes.
— Kaiko (@KaikoData) September 4, 2023
In our latest Data Debrief, we explore the market impact of the ETF decision, in addition to:
👉 $XRP price analysis
👉 #stablecoin depegs
👉 $FTT trade volume pic.twitter.com/439kmKaaVC
On August 29, a federal appeals court ruled that the SEC must reconsider its rejection of Grayscale Investments’ attempt to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. This news, as predicted, caused market volatility, and triggered a flurry of buying activity among market participants. However, the rise in trading volume and derivatives activity was rather subdued.
According to research firm Kaiko’s latest Data Debrief, the Bitcoin ETF news seemed favourable for the crypto asset manager company. The court decision led to an increase in the cumulative volume delta (CVD) on major pairings, demonstrating positive sentiment.
Kaiko’s report also highlighted that crypto exchange Binance showed underlying purchasing interest with over $50 million on its BTC-USDT pair, while Coinbase peaked at around $35 million 12 hours after the verdict. However, the positive mood was fleeting, as the SEC made an announcement later in the week.
On September 1, the SEC postponed making a judgement on all of the spot bitcoin exchange-traded fund (ETF) applications filed by applicants until October, leading to a dramatic drop in BTC to $26,100 within 24 hours of the news. The Grayscale verdict did very little to enhance BTC volumes, especially given how low trade activity has been in the past few months.
According to Kaiko, on August 29, BTC volume rated 504 out of 973 days (from the beginning of 2021). This shows that the favourable sentiment did not significantly increase Bitcoin trading volume. The report read, “Bitcoin open interest in native units barely moved, declining moderately by 8% between August 29-31 to 237K BTC”.
Also, Bitcoin perpetual futures (open interest) scarcely changed, falling by 8% to 237,000 BTC on August 29-31. The report stated that the move was much smaller than during the Aug 16-17 selloff, when the amount of open interest fell by 22% within two days.
