Bitcoin ended the week bearish by 3%, trading at $35,287.78 at the start of the week but closing the week at $34,240.19. The flagship cryptocurrency traded below the $35,000 trading zone on news of regulatory crackdown from the U.S Senate.
Last week, Bitcoin investors panicked as U.S Senator Elizabeth Warren, who chairs the Senate Banking Committee’s Subcommittee on Economic Policy, gave the U.S Security and Exchange Commission (SEC) an ultimatum for cryptocurrency regulation. She gave Gary Gensler, the SEC Chairman, till July 28th to respond to questions surrounding cryptocurrency regulations. This caused the asset class to decline below $33,000 during the week but over the weekend, the market rebounded on positive news of new Whale accumulation.
Last week, on-chain analytics data revealed that the number of Bitcoin on exchanges is growing smaller, which indicates renewed demand for the asset class. According to on-chain analytics expert Willy Woo, exchanges were down 17,794 BTC ($605 million) last week. To add, Whales accumulation has also increased as Whales increased their BTC holdings by approximately 65,000 BTC ($2.2 billion).
The GrayScale unlocking
The GrayScale unlocking is an event that has been the most talked about in the cryptocurrency space this month. This event involves the multiple unlocking of GBTC shares held by institutional digital asset giant, GrayScale.
GrayScale is one of the worlds largest digital currency asset managers with over $40 billion in assets under management. Starting from tomorrow, the Grayscale Bitcoin Fund (GBTC) will begin to unlock around 41,000 BTC ($1.4 billion) in GBTC shares, which have been subject to a six-month lock-up period.
Opinions differ about the unlocking’s market impact. JP Morgan stated in a release that Bitcoin will drop to around $25,000 as a result of the unlocking, while others like popular cryptocurrency analyst, TheCryptoLark, argued that spot markets will be broadly unaffected because it is the GBTC locked shares that will be released into the market and not actual Bitcoin. July 18 is of particular interest because that day’s unlocking is worth over 16,000 BTC.
Statistician, Willy Woo commented last week, “When GBTC shares unlock and get sold, the GBTC Premium drops (share price drops relative to the BTC in the trust).”
Woo added, “Investors now have more incentive to buy GBTC shares rather than BTC, it diverts some of the buying pressure on BTC spot markets. This is bearish.”
What to expect
The cryptocurrency market is in for a volatile week as the unlocking is set to begin tomorrow. Investors are advised to be cautious because there is a lot of FUD (Fear, Uncertainty and Doubt) in the market surrounding this news. Bitcoin is currently trading at $34,200, up 1.36% as of the time of writing this report.