Bitcoin surges as traditional finance players enter the cryptocurrency market.

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Bitcoin, the world’s largest cryptocurrency by market value, rose over the past 24 hours following announcements by various traditional finance firms about their entry into the crypto market, indicating bullish sentiment. Bitcoin jumped 8% during the day, pushing it to $28,800, after trading flat for the past few days around $26,800. Altcoins also surged, with bitcoin cash (BCH) rallying more than 20% during the same period. Banking giant Deutsche Bank announced on Tuesday that it had applied for a digital asset custody license in Germany, and crypto exchange EDX Markets (backed by Citadel Securities and Fidelity) began offering trading for BTC, ether (ETH), litecoin, and bitcoin cash. BlackRock also filed for a spot BTC exchange-traded fund (ETF) just last week. “This move towards crypto by major financial institutions reflects a significant shift in their stance on the industry’s potential, especially given the timing,” said Mark L. Newton, head of technical strategy at FundStrat, in a note.

Grayscale Bitcoin Trust’s (GBTC) share price continued to soar on Tuesday, fueled by optimism about converting the fund into an ETF after BlackRock filed for a spot bitcoin ETF. According to TradingView data, the shares rose above $16 on secondary markets for the first time since May 10 and have gained about 24% since Thursday, the day of BlackRock’s filing. The discount on GBTC’s share price relative to net asset value narrowed to as little as 33% Tuesday morning, according to blockchain’s calculation. This is the lowest level since last September and lower than the 34% it recorded in early March.

Investment management company Invesco, which has $1.4 trillion in assets under management, has reapplied for a spot bitcoin ETF. In 2021, Invesco first filed for a bitcoin ETF in conjunction with Galaxy Digital. It also filed for a bitcoin futures ETF but dropped the effort in October 2021 after a futures ETF by ProShares was approved and began trading first. In its filing, Invesco argued that the lack of a spot bitcoin ETF pushes investors toward riskier alternatives, as seen in insolvencies like FTX, Celsius Network, BlockFi, and Voyager Digital Holdings. Invesco also emphasized the need for investor protection, stating that approval for such a spot bitcoin ETF hinges on a surveillance sharing agreement with a significant, regulated market rather than on the regulation of the spot bitcoin market itself.

Chart of the Day

  • The chart shows the annualized rolling three-month basis in bitcoin futures listed on the Chicago Mercantile Exchange and offshore exchanges since January. Basis refers to the spread between prices in futures and spot markets.
  • The CME basis or premium has jumped to a yearly high of 12%, indicating a bullish action on the global derivatives giant.
  • Basis on offshore exchanges lags at 5.88%.
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Edited by Sheldon Reback.