Bitcoin witnessed continued weakness on as consolidation coincided with a brief slowdown in institutional investment.
According to data from Cointelegraph Markets Pro and TradingView, BTC struggled to maintain its price around $51,000.
Bulls found themselves confined within a narrow trading range for over a week, with concerns arising over the inflows to spot Bitcoin exchange-traded funds (ETFs).
Recent days saw a significant deceleration in these inflows, with February 21st even experiencing a net outflow of approximately $36 million, as per data shared on X (formerly Twitter) by sources including BitMEX Research.
February 22nd showed heightened activity, with net inflows surpassing a quarter of a million dollars, even after factoring in outflows from the Grayscale Bitcoin Trust (GBTC).
“Normality resumed with a $251M inflow into the Bitcoin ETFs,” responded James Van Straten, research and data analyst at crypto insights firm CryptoSlate.
Addressing the pace of buying from ETF operators, Thomas Fahrer, CEO of crypto-focused reviews portal Apollo, predicted that BlackRock’s iShares Bitcoin ETF (IBIT), the largest among them, would alter BTC supply dynamics in the future.
“98% of all the #Bitcoin in existence already costs >100K if you tried to buy it,” he argued alongside a chart of IBIT holdings.
“Remember that the current price is just the marginal trade. Blackrock is going to test this theory, so we’ll find out soon enough.”
As of February 23rd, IBIT held 124,535 BTC ($6.35 billion), according to data from Apollo’s own ETF tracker.
Turning to low-timeframe BTC price analysis, popular trader Skew encapsulated the sentiment among seasoned market observers.
He concluded that the uptrend remained intact, but significant support levels were now back in focus.
These included the 88-period and 100-period exponential moving averages (EMAs) on the four-hour chart at $50,017 and $49,654 respectively, along with the 18-period EMA on the daily chart at $49,645.
“Currently, price trades around range low & 4H 55EMA which typically is a near term trend inflection point, meaning momentum picks up soon,” part of his latest X analysis read.
United States cryptocurrency exchange Coinbase has strongly supported Grayscale in its bid to transform its Ethereum Trust into an Ether exchange-traded product (ETP), asserting that Ether is not a security.
On February 22, Coinbase’s chief legal officer, Paul Grewal, unveiled the firm’s 27-page letter presenting the legal, technical, and economic arguments for why the U.S. Securities and Exchange Commission (SEC) should endorse an Ether-based ETP.
Coinbase presented five primary arguments, highlighting that Ether is appropriately categorised as a commodity, as evidenced by the U.S. Commodity Futures Trading Commission’s endorsement of ETH futures, statements by SEC officials, and court rulings.
Furthermore, it emphasised that the SEC has not contested the CFTC’s classification of ETH as a commodity.
“Our letter sets out what anyone knows who’s paid even the slightest attention to the matter: ETH is not a security,” stated Grewal, adding, “In fact, both before and after the Merge, the SEC, the CFTC, and the market have treated ETH not as a security but as a commodity.”
The letter also argued that Ethereum’s proof-of-stake consensus displays robust governance, mitigating risks of fraud and manipulation.
Additionally, it contended that the SEC’s endorsement of spot Bitcoin exchange-traded funds (ETFs) should similarly apply to an Ethereum ETP.
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Coinbase supported its arguments with market data showing widespread ETH ownership and trading activity, along with the similarity between ETH futures ETFs and spot Ethereum-based funds.
The firm also underscored Ethereum blockchain’s inherent technological and operational security mechanisms that limit susceptibility to fraud and manipulation.
Finally, Coinbase highlighted its advanced market surveillance capabilities and partnership with the Chicago Mercantile Exchange.
The letter was a response to NYSE Arca’s proposed rule change to list and trade shares of the Grayscale Ethereum Trust as an Ethereum ETP, as per SEC’s procedural requirement for public feedback.
However, just two days earlier, analysts from S&P Global expressed concerns about spot Ethereum ETFs, warning that they could introduce new concentration risk to the blockchain network, particularly those incorporating staking, which could affect the mix of validators participating in Ethereum’s consensus mechanism.
The recent debut of the Ethereum layer-2 network Starknet’s token has been tumultuous, with its value plummeting by over 60% within two days.
Initially airdropped to certain users on February 20, the Starknet token (STRK) experienced a sharp decline from its peak of $4.41 to less than $1.90, as reported by CoinGecko.
Although listed on Binance and briefly soaring to $7.70, the token’s value swiftly nosedived by 75.4% to below $1.90. Blockchain analysts at Lookonchain observed this downward trend, noting, “The price of $STRK has been falling since its launch.”
They identified significant sell-offs by Nethermind, an Ethereum infrastructure firm, which offloaded 3.41 million STRK, equivalent to over $6.7 million.
Concerningly, Lookonchain warned that further selling might occur, given Nethermind’s remaining stash valued at over $12 million.
In a separate revelation, Lookonchain disclosed a consolidation of STRK holdings by an airdrop participant, consolidating 1.2 million STRK, worth $2.4 million, from approximately 1,800 wallets into a single address.
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This followed a similar occurrence the previous day, involving 1.4 million STRK from around 1,400 wallets.
Allegations surfaced prior to the airdrop by Yearn.finance developer Banteg, suggesting that a significant portion of eligible wallets were associated with GitHub accounts controlled by airdrop hunters.
Furthermore, dissatisfaction arose among Starknet users who claimed ineligibility for the distribution despite substantial transaction activity.
Eligibility criteria demanded a minimum holding of 0.005 Ether (approximately $10) at a snapshot on November 15, 2023.
Criticism extended to STRK’s unlocking schedule, designed to allocate 1.3 billion tokens, equivalent to 13% of the total supply, to Starknet investors and contributors approximately two months post-launch.
Despite the token’s depreciating value, Starknet’s total locked value surged by nearly 30% within 24 hours to $73.5 million, as per DefiLlama.
The airdrop initially garnered significant interest, with 45 million STRK tokens claimed within the first 90 minutes, amounting to 92% of the total distribution value exceeding $790 million, according to Voyager’s data.
The Gyeonggi Provincial Tax Justice Department, situated in the most densely populated province of South Korea, amassed 6.2 billion won (£3.9 million) in undeclared taxes during 2023 by deploying a digital tracking system aimed at cryptocurrency accounts of tax evaders.
As per a report by Yonhap News Agency on February 22, the Gyeonggi tax department utilised resident registration data of “delinquents,” tracing their mobile phone numbers to uncover their accounts on digital asset exchanges.
The key innovation lies in a digital tracking system.
Previously, tax services had to individually request information from crypto exchanges, a process spanning up to six months for communication and document exchange.
According to Yonhap, the province’s digital management system truncated this period to around 15 days.
Leveraging the system, the provincial tax department pinpointed the crypto accounts of 5,910 individuals, each indebted with over 3 million won (£1,800) in local taxes.
From 2,390 offenders, the department recouped 6.2 billion won (£3.9 million).
The province intends to fortify collaboration with virtual asset exchanges and to “review administrative measures” for platforms unwilling to cooperate.
As Noh Seung-ho, head of the Provincial Tax Justice Department, affirmed:
“We will continue to take robust collection action against unscrupulous delinquents, such as those who claim insolvency to evade taxes and engage in virtual asset trading.”
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Meanwhile, South Korea’s Financial Intelligence Unit (FIU) actively urges crypto exchanges to report any transactions raising suspicions of money laundering and illegal “foreign exchange outflow.”
The agency also plans to introduce a “virtual asset analysis system,” scrutinising and analysing virtual asset transaction specifics and “complex movement paths.”
In early February, the South Korean government issued a fresh update to the Virtual Asset Users Protection Act, imposing significant criminal penalties and fines for infractions.
These include fixed-term imprisonment exceeding one year or a fine ranging from three to five times the amount of illicit profits.
Culprits who amass over 5 billion won (£3.1 million) from unlawful crypto trading schemes face life imprisonment.
Stablecoin issuer Tether declined to give a definitive response regarding whether it would terminate its support for the Tron network following its competitor Circle’s cessation of stablecoin minting on the blockchain on Tuesday, February 20.
“Tether tokens are issued on several blockchains, which are simply transport layers for such tokens,” Tether stated in a communication with Cointelegraph when questioned about Circle and whether Tether was contemplating a similar action.
“Tether retains the ability to freeze transactions on each directly supported transport layer to accomplish its compliance duties.
Nevertheless, Tether actively monitors the safety of each one of the supported transport layers to ensure the highest standards for our community,” the firm articulated.
Tether holds the position as the largest stablecoin with a market capitalization of $97.7 billion, while Circle’s USD Coin trails at $28 billion, as per CoinGecko data.
The Tron network accommodates over 51.8 billion USDT, representing over half of the nearly 101 billion USDT tokens issued across multiple blockchains, according to Tether’s transparency report dated February 21.
Moreover, an additional $76.2 million is allocated to provide near-term liquidity for the token on the Tron network.
Tether’s remarks were prompted by an announcement from Circle on February 20, disclosing the immediate cessation of USDC minting on Tron and the gradual withdrawal of support for the network, asserting that the decision aligns with “efforts to ensure that USDC remains trusted, transparent, and safe.”
In January, a United Nations report suggested that “USDT on the Tron blockchain has become a preferred choice” for cyber fraud and money laundering in Southeast Asia owing to the “ease, anonymity, and low fees of its transactions.”
Tether refuted the report, stating that the UN overlooked USDT’s traceability and the firm’s history of collaboration with law enforcement.
It highlighted that it froze over $300 million worth of USDT used in illicit activities “within the last few months,” including $225 million frozen in November 2023 as part of a United States investigation into a Southeast Asian human trafficking syndicate.
Ethics watchdog group Campaign for Accountability penned a letter to United States senators in November 2023, alleging Tron “has been named in multiple international law enforcement actions involving billions of dollars in transactions by alleged organised crime groups and sanctioned entities.”
The U.S. Securities and Exchange Commission initiated legal action against the Tron Foundation and founder Justin Sun in March 2023, alleging they offered unregistered securities and engaged in manipulative trading, contentions that Sun denies.
Bitcoin is poised for a downturn around its upcoming block subsidy halving, though the exact timing remains uncertain.
Renowned trader and analyst Rekt Capital, in his latest YouTube presentation on February 20, forecasted BTC’s price trajectory mirroring the bullish trends of 2016 and 2020.
The deliberation revolves around the timing of the 2024 “pre-halving retrace” for Bitcoin, which has lingered within a narrow band for over a week, encountering resistance around $52,000.
Despite dampened sentiment and subdued performance of alternative cryptocurrencies, seasoned market observers maintain a positive outlook.
Drawing from historical patterns leading to all-time highs, Rekt Capital identified common phases in bull market formations.
He elucidated, “In the past, a macro downtrend break always precedes upside going into the halving. Then we have a pre-halving retrace and then a post-halving reaccumulation period and then parabolic price action toward new all-time highs.”
A chart accompanying the analysis depicted BTC/USD breaking its initial downward trendline, only to encounter resistance from a previously established zone.
The absence of breaking through and subsequently retesting this zone as support — the “pre-halving retrace” phase — characterises the current state of affairs in 2024.
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Rekt Capital asserted, “We’re going to have the same thing in this cycle as well.” The focal point for the anticipated pre-halving pullback resides around $45,000, as corroborated by data from Cointelegraph Markets Pro and TradingView.
The query persists, “Are we going to retest this resistance this month in the pre-halving period?” as the analyst highlighted the recurrent failure to do so in preceding pre-halving periods.
Earlier assessments by Rekt Capital indicated Bitcoin’s complete immersion in its pre-halving surge, with recent observations suggesting accelerated key price developments compared to previous cycles.
Turning to current market dynamics, others expressed reluctance to adopt a bearish stance amidst the ongoing lateral movements.
Caleb Franzen, founder of research platform Cubic Analytics, remarked on Bitcoin’s steadfast trading range, observing minimal deviation over the past week.
Similarly, analyst Matthew Hyland underscored the significance of the 0.618 Fibonacci retracement level from all-time highs, cautioning that a breach below $49,000 could alter the outlook, while consolidation within an upward trajectory favours its continuity.
The Hong Kong Securities and Futures Commission (SFC) has been inundated with crypto license applications, totaling 18 from various local and global players over a span of two months.
Among the applicants are prominent names like Huobi HK, Crypto.com, OKX, Bybit, and DFX Labs.
To meet the stringent licensing requirements, applicants must undergo thorough due diligence checks, including comprehensive financial audits, which can be a costly endeavor.
It’s reported that Web3 firms are spending up to $25 million to ensure compliance and build robust applications for these licenses.
The clarity provided by Hong Kong’s regulatory framework regarding exchange licensing has not only attracted crypto exchanges but also traditional brokerages like Tiger Brokers.
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Tiger Brokers recently expanded its SFC license to incorporate crypto trading, acknowledging the growing significance of cryptocurrencies as an asset class and leveraging its fintech expertise to integrate Web3 technology.
Additionally, Harvest Hong Kong, a major Chinese fund manager, submitted the first application for a spot Bitcoin exchange-traded fund (ETF) on Jan. 26, marking a significant development in Hong Kong’s crypto landscape.
In terms of security measures, Hong Kong has imposed a minimum insurance requirement of 50% for licensed crypto exchanges to safeguard customers’ assets.
Notably, OSL Exchange has taken steps to exceed this requirement by partnering with Canopius, a Lloyd’s of London underwriter syndicate, to secure an insurance policy covering 95% of its users’ assets over a two-year period.
This underscores the increasing focus on security and risk mitigation within the crypto industry.
Bitcoin (BTC) soared to a fresh 2024 peak of £53,019 on February 20, only to sharply decline to £50,000 on select exchanges.
Traders attribute consistent inflows of spot BTC ETFs and the forthcoming supply halving event as pivotal drivers behind this surge, with BTC currently trading above £52,100 at the time of writing.
Let’s delve into the primary factors underpinning today’s volatility in the Bitcoin price.
Bitcoin futures’ open interest (OI) has surged to a new yearly pinnacle, reminiscent of levels last witnessed in November 2021.
This surge suggests heightened trading activity surrounding the foremost cryptocurrency by market capitalisation.
Data from cryptocurrency futures trading and information platform Coinglass reveals that total OI for BTC futures reached £22.69 billion on February 20, the highest since November 11, 2021, closely approaching the peak of £23 billion recorded at that time.
Bitcoin futures OI surged by over 30% in 2023, correlating with Bitcoin’s 23% year-to-date surge to £53,000, reaching levels last observed in December 2021.
Open interest serves as a gauge of the overall value of all unsettled Bitcoin futures contracts across exchanges, with an uptick indicating increased market activity and trader sentiment surrounding the pioneering cryptocurrency.
Investor sentiment remains buoyant, buoyed by rising inflows to spot BTC ETFs despite outflows from gold ETFs on the rise.
Bitcoin has surpassed the £49,000 peak reached subsequent to the January 10 approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission.
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Data from Farside Investors reveals that £4.91 billion has flooded into Bitcoin ETFs within six weeks since trading commenced on January 11.
The total weekly inflows into the newly issued spot Bitcoin ETFs reached £2.5 billion last week, as per CoinShares Digital Asset Fund Flows Weekly Report.
CoinShares analyst James Butterfill remarked, “These inflows, alongside recent positive price movements, have propelled total assets under management (AuM) to £67 billion, marking the highest level since December 2021.”
On February 17, financial commentator Tedtalks Macro underscored the steady rise in net inflow to spot Bitcoin ETFs, averaging £182 million per day, asserting,
“Post-halving we only need ~£25M of net inflows to spot ETFs per day, to offset the miner production.”
The impending Bitcoin halving, anticipated to slash miners’ rewards by 50%, is also projected to significantly stoke investors’ interest in BTC.
Historically, the halving event has preceded Bitcoin embarking on a parabolic uptrend in the months post-event.
Starknet, the Ethereum layer-2 scaling protocol, commenced the distribution of its native network token on 20th February, with millions of tokens claimed upon the launch of the provisions portal.
Real-time data monitoring the claims indicated that eligible users had acquired more than 45 million STRK tokens within the initial 90 minutes of the allocation.
The token began trading on several major exchanges.
STRK was traded at over £5 following its listing on Binance and exceeded £3 on KuCoin as the tokens permeated the broader cryptocurrency ecosystem.
CoinMarketCap data revealed STRK trading between £3 and £4, with its market capitalisation valued at over £2.1 billion.
More than 1.3 million wallets are eligible to claim Starknet’s native token, including those of Ethereum solo and liquid stakers, Starknet developers and users, as well as projects and developers from outside the Web3 ecosystem.
The Starknet Foundation has released an overview of its token provision alongside the launch of a dedicated portal that enables individuals to verify their eligibility and acquire STRK tokens.
Over 700 million STRK tokens are poised to be allocated across nine categories and will be utilised for governance and transaction fees. Starknet intends to introduce staking of STRK tokens in the future.
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Starknet is among Ethereum’s principal L2s that pioneered zero-knowledge (ZK) rollup technology.
The protocol facilitates the processing of transactions and smart contract functions off-chain, with cryptographic proofs submitted to Ethereum to access the security guarantees of its underlying blockchain.
The layer-2 scaling protocol has also addressed concerns raised by Starknet and Ethereum community members regarding the eligibility criteria for the STRK airdrop.
Starknet’s active users surged in recent weeks as prospective STRK recipients and airdrop farmers sought eligibility for the campaign.
A statement from Starknet subsequent to the launch of the provisions portal acknowledged feedback from community members and network users who felt “overlooked due to certain Provisions criteria.”
The Starknet Foundation affirmed that it was working on a resolution for users who were not deemed eligible.
The broader cryptocurrency ecosystem has also been cautioned to remain vigilant against scams and malicious links.
Bitcoin holdings on the Coinbase crypto exchange have dwindled to their lowest point in nine years as users relocate a substantial portion of their holdings away from the exchange.
According to a report from CryptoQuant, whales shifted 18,000 Bitcoin, valued at nearly $1 billion, away from Coinbase over the weekend, with transfer amounts ranging from $45 million to $171 million.
The public order book of Coinbase presently contains approximately 394,000 BTC, estimated to be valued at $20.5 billion.
The movement of BTC holdings away from centralised exchanges by whales is viewed as a positive indicator as it reduces the availability of Bitcoin for sale.
Nonetheless, opinions on social media regarding the nature of these transfers are mixed.
Some speculate that the funds are being transferred to custodial wallets in anticipation of a price surge, particularly with the forthcoming Bitcoin halving just two months away, causing a supply shock.
Conversely, some believe that the transferred funds might be utilised for liquidity in over-the-counter (OTC) trades.
Others suggest that the funds might be transferred to a different custodian and that these are not individual withdrawals, remarking that the majority of assets held on these exchanges do not actually belong to them, thus the actual withdrawal figure should be much lower.
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With each Bitcoin halving cycle, the influx of new BTC into the market is halved, leading to a supply squeeze as demand rises.
The next Bitcoin halving is scheduled for April at a block height of 740,000, reducing the block reward from 6.25 BTC to 3.125 BTC per mined block.
This halving coincides with significant institutional demand, evidenced by the approval of 11 spot Bitcoin exchange-traded funds (ETFs) in the United States in January.
Presently, approximately 900 BTC are mined daily, while the daily net inflows of Bitcoin ETFs amount to around half a billion dollars, equivalent to about 9,650 BTC, notwithstanding Grayscale registering nearly $100 million in daily outflows.
Following the April halving, the daily production of BTC will decrease to about 450 BTC, while institutional demand is expected to persist.
This significant disparity between supply and demand historically favours a bullish trajectory for the Bitcoin price, often resulting in new all-time highs within a year of the halving.
Bitcoin is currently trading at around $52,000, marking its highest level since December 2021, albeit a 25% decrease from its peak of approximately $69,000.