Crypto Banter Predicts Incoming Bitcoin Dump
Bitcoin Volatility, It’s Never Going to Be the Same Again
Ran Neuner posted a video on Crypto Banter where he explained his views about Bitcoin post the Spot ETF approvals last week. He holds the view that Bitcoin has now transitioned to being an institutional asset which will see most of its action during trading time US Eastern Time. Apart from that, we should expect quieter times and less volatility. Neuner indicated that this means investors wanting to make serious money should now shift to altcoins.
I’m here because I want to make money on weekends. Sometimes I make the most money trading on weekends, but I think for Bitcoin, that’s not going to be the case anymore. I think, for Bitcoin, sadly, I think that the majority of the returns are now going to be an institutional asset.
BTC Dump Incoming: Here is Why
Neuner predicts that when the market opens, there might be an initial bounce, but it will likely be followed by a dump. This is because institutions might not be able to transfer their holdings from Grayscale products to ETFs quickly enough. Institutions are also looking for a favourable price to purchase Bitcoin, not wanting to pay high retail prices, and may prefer a lower price to enter the market.
Neuner believes that if Bitcoin’s price continues to fall, altcoins will eventually follow, despite currently holding up relatively well. Historically, he has not seen a sustained period where Bitcoin falls while altcoins rise significantly. He suggests that the cycle will move from Bitcoin to Ethereum, then to large-cap altcoins, and finally to small-cap altcoins.
I have never seen a time where on a sustainable period Bitcoin goes down and altcoins actually continue to go up. Then we’re going into large cap altcoins, and then we’re going into the small cap altcoins. And this is when we’re going to have the best, best, best fun. This is where the fun starts.
Bitcoin ETF Dynamics
Neuner delves into the dynamics surrounding Grayscale, the largest holder of Bitcoin, and its recent conversion into an ETF (Exchange-Traded Fund). He notes that USD $579 million (AUD $873 million) flowed out of Grayscale last week, emphasising the scale of their holdings: approximately 619,700 Bitcoins, worth around USD $25-26 billion (AUD $37-39 billion). Previously, these Bitcoins were locked as you couldn’t redeem GBTC (Grayscale Bitcoin Trust) shares for Bitcoin. However, with Grayscale’s transformation into an ETF, these Bitcoins can now be redeemed.
This change has led to some investors starting to sell their Bitcoins. Some were trading based on the discount arbitrage opportunity in Grayscale, and now that the price has risen, they are exiting their positions. As a result, Grayscale began to liquidate some of its Bitcoin holdings. This selling activity contributed to a decline in Bitcoin’s price, and a corresponding increase in the discount for GBTC shares.
But Neuner thinks the buying is far from over, saying that potentially 10% or around USD $2.8 billion (AUD $4.2 billion) worth, could be sold on the open market.
So, what are we scared of here? If you look at the new money that’s coming into the ETFs, well that’s nowhere near the $2.8 billion. So now the race is between the sales of GBTC and the inflows that the ETF providers can bring in. And if people redeem their GBTC-ETF faster, then we can bring in new people, then we’re going to continue to get a market dump. And in my opinion that is probably what’s going to happen.