Capital Inflows into Crypto Market Remain Strong; Grayscale Pushes for BTC Spot ETF

Chart of the Day

Over the weekend, the broader crypto market struggled to sustain its recovery momentum as investors started to internalize the impact(s) of escalating geopolitical tensions, as well as the likelihood of a half-point interest hike in May. As a result, BTC has, as of the time of writing, failed to settle above the $40k psychological barrier after two days of continuous decline. The largest cryptocurrency by market cap is currently struggling to defend the $39k level after posting a 1.27% loss in the last 24 hours. Several key technical indicators have divulged a short-term bearish formation on the hourly chart, and are also hinting at the possibility of a further decline for BTC should the support levels within the $37.5k to $38.8k zone fail to hold. 

On a macro level, and in some better news, capital inflows into the crypto market remain strong. Approximately $17 billion of venture capital investments have been poured into the crypto space in 2022 so far, with more than 1,000 deals made. This year has also already witnessed a new record with regard to the highest median deal made, one that amounted to $4.5 million. 

In a similar vein to BTC, ETH experienced a plunge after failing to stay atop the $3,000 level. As of the time of writing, ETH is trading below the $2,900 level after shedding 2.7% of its market value within a single day. Most major altcoins are also submerged in a sea of red, with NEAR, the top-performing L1 token of March, shedding a significant 7.6% from 24 hours ago.  

Back to (the) Futures

The repercussions of the U.S. Federal Reserve's increasingly hawkish stance towards the curbing of inflation are now finally being felt within the broader crypto market. Before this, the crypto market has been lagging behind traditional assets with regard to its reaction to said monetary policies. In particular, BTC seems to be feeling the effects of the impending rate hikes the most. As BTC's spot price continued to weaken over the weekend, the derivatives market also saw its funding rates go southbound. Meanwhile, within the options market, the overall term structure has been moving upwards from a low starting point, suggesting that there is ample room for the volatility level within the crypto market to spike in the near-term. 

Talk of the Town

Asset manager Grayscale has renewed its efforts in pushing the Securities Exchange Commission (SEC) to approve the conversion of the firm's $40 billion Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). In a letter sent last week to the SEC, Grayscale's legal counsel argued that the SEC's recent approval of the Teucrium BTC Futures Fund under the '33 & '34 Act provides a basis upon which it should reconsider the approval of Grayscale's spot-based ETF. Michael Sonnenshein, Grayscale's CEO, has  stated that he would consider taking legal action against the SEC if the bid is rejected.