Yahoo Finance Why investors are taking bitcoin off exchanges
Analysis suggests investors are taking bitcoin off exchanges for long-term holding. In the past month, nearly 18,000 bitcoins, representing a decrease of nearly 1%, have been withdrawn from cryptocurrency exchanges, as per CryptoQuant data.
This suggests they want to hold the digital asset because they expect a future price rise.
The consensus amongst traders is that prices could rise if one of the spot bitcoin ETF applications that have been filed with the US Securities and Exchange Commission (SEC) is approved.
A spot bitcoin exchange traded fund (ETF) is a financial product that investors hope will open the gateway for mainstream capital to flood the crypto market.
Spot bitcoin ETF delays
However, this week US regulators chose to postpone making a decision on more of the ETF filings. This time it involved the highly anticipated ARK 21Shares Bitcoin ETF.
On Tuesday the SEC delayed its ruling on the ARK 21Shares Bitcoin ETF, and a similar filing from fund manager Global X.
Ark Investment Management and 21Shares have been seeking an ETF approval since 2021. They made their latest spot bitcoin ETF application in April.
After the filing, the SEC said it needed more time to rule, setting a deadline for November 11. However, the SEC said on Tuesday it would now take until January 10 to come to a decision on the application.
Read more: Institutional investment brings new momentum to crypto
The regulator is also giving itself at least another 45 days to make a decision on Global X's proposed bitcoin ETF.
These delays signal the SEC could be planning to use the full amount of time it is allowed to decide on each filing. The regulator is allotted 240 days to consider approving spot bitcoin ETF applications. It is not immediately clear whether the SEC will do the same for competing proposals by BlackRock, Fidelity, WisdomTree and other companies.
Bitcoin trading flat
Bitcoin (BTC-USD) has traded flat after the recent postponements. The digital asset is locked in a tight range around the mid-$26,000 mark. The world's largest cryptocurrency by market capitalisation is currently changing hands for $26,432, a slight rise of 0.2% in the past 24 hours, according to CoinGecko.
The digital asset is still down 60% from its November 2021 all-time high of around $68,000. However, it has fared better than most risk assets so far in 2023. When looking at the year-to-date price chart, bitcoin has gained 60% since January. This is significant considering the digital asset bottomed out at around $16,800 in November 2022, after the calamity of the FTX cryptocurrency exchange collapse.
Read more: Crypto live prices
Most analysts believe the current price is being supported by investor optimism that an exchange traded fund approval is only a matter of time. But after the recent delays from the SEC, this optimism could be wearing thin.
BlackRock's spot bitcoin ETF
The highest hopes are held for BlackRock's spot bitcoin ETF filing. With most analysts suggesting that the world's largest asset manager would not make such an application without the understanding that its approval is a foregone conclusion.
BlackRock (BLK) filed for their spot bitcoin ETF on June 15. This prompted several other institutions to refile previous applications.
Coinbase (COIN) was detailed as the crypto custodian and spot market data provider for BlackRock's filing. BNY Mellon (BK) was listed as its cash custodian. The filing was a surprise for many after BlackRock CEO Larry Fink had previously said bitcoin was an index for money laundering.
Fink now seems bullish about the digital asset. During an interview on CNBC following his company's second-quarter earnings report, Fink stated that "more and more" gold investors have been inquiring about the role of cryptocurrency over the last five years. He added that ETF approvals could democratise access to bitcoin in the same way they have done for gold.
Ongoing crypto winter
The optimism that a spot bitcoin ETF could finally be approved cannot disguise significant fault lines showing throughout the crypto-ecosystem. Trading volume across centralised exchanges has slumped, venture capital funding is drying up, and in August volatility in bitcoin markets hit an all-time low.
Also, according to a recent study, over 95% of NFTs are now worthless. A recent study by dappGambl said that of the 73,257 NFT collections identified, 69,795 of them have a market cap of zero ether (ETH-USD).
"This statistic effectively means that 95% of people holding NFT collections are currently holding onto worthless investments," the analysts said.
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