Flight to Quality

The Bid We’ve Been Waiting For

Last week, we painted a picture of a market on the cusp of a potential rally. Our thesis hinged on a confluence of favorable factors: a local peak in rates, a possible global liquidity turnaround, and encouraging seasonality trends. However, the market remained largely inert, a phenomenon we attributed to the uncertainty surrounding the SEC's potential stance on Grayscale. The market had been in a holding pattern, with high-volume BTC traders preferring GBTC over spot BTC to mitigate directional price risk, likely also hedging their bets by shorting the futures market.

GBTC and ETHE Rallies

This week marked a notable shift. Both GBTC and ETHE witnessed impressive rallies, with GBTC's discount momentarily dipping to 8% before rebounding to the 12-14% range. The market seemed to finally respond to the catalysts we identified, breaking the inertia, and injecting fresh buying interest into the spot BTC market.

Bitcoin too played its part, rallying in the overnight hours of Sunday to crest above $28,000, a significant level that aligns with its 200-day moving average. This level also holds psychological importance, acting as a trading fulcrum around which market sentiment tends to pivot.