Cryptocurrency market was able to achieve some gains towards the end of this week, led by Bitcoin, which reached its highest levels in a week, reaching the level of $26,276 at yesterday’s close, as well as Ethereum, which recorded the highest close this week at the level of $1,647.
Yesterday’s crypto gains come with more positive signs and this time from institutional investors. Ark Invest, run by Cathie Wood, a leading cryptocurrency supporter, noted about the rising sentiment regarding the conversion of Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin exchange-traded fund (ETF), after ordering the SEC to reconsider its rejection of Grayscale’s application to convert GBTC into an ETF.
Yesterday’s Ark Invest report cited a decline in the discount from the net asset value (NAV) of GBTC, which represents the difference between the market value of the fund’s holdings and the market value of the fund itself, to the lowest levels in about a year, with the discount reaching 18% after reaching 24% last August. It is noteworthy that this discount reached more than 40% at the peak of the increases in the year 2023.
Ark Invest believes that this decline in the discount reflects optimistic market sentiment about the possibility of actually converting GBTC into an ETF.
While this may actually seem to be what the markets think, I think. More broadly, we continue to see a strong return to the number of open interests in Bitcoin derivatives, which reached the highest levels in a week, with more than 7.52 million positions today as of the time of writing at approximately 7:30 AM GMT, according to the data provided by CryptoQuant.
Yesterday also, we saw more developments on the regulatory side in the decentralized finance (DeFi) market. The Commodity Futures Trading Commission (CFTC) fined a number of companies operating in the DeFi market with fines ranging from 100 to 250 thousand US dollars, based on a number of different charges, which revolved around offering leveraged financial instruments in an unlicensed manner, as well as non-compliance to KYC and anti-money laundering regulations, as well as insufficient measures to prevent US residents from obtaining unauthorized services.
While the Director of Enforcement at the CFTC indicated that companies operating in the DeFi market should not think that unauthorized financial instruments may become legal once they are presented through smart contract technology, he added that despite the development and complexity of this technology, the Commission is keeping up with this development enables it to pursue providers of unauthorized financial instruments.
I believe that these rapid legal developments, which are now expanding to include many aspects related to cryptocurrencies and associated technology, will continue to shape the regulatory and legislative environment for this market, even though they may temporarily frustrate traders. However, further actions by law enforcement authorities may contribute to reducing the state of uncertainty and loss of confidence in this market in the future, with clarity on what is legal and illegal.