Bitcoin (BTC) is compared with its development from the end of 2020. But this rally has several major differences that make it “abnormal”.
Noisy Pete Humiston, Manager of Kraken Intelligence Research, Bitcoin is going through a very different development in the third quarter of 2021 than in the fourth quarter of 2020
GBTC continues to offer at a discount
Although Bitcoin rose from $ 29,000 to $ 48,000 in just one month, people are not on a buying frenzy.
The higher levels get solid support, but demand isn’t as great as it was earlier this year or late last year.
The Grayscale Bitcoin Trust (GBTC) continues to be traded at a discount of around 13 percent on the spot price.
Although the Bitcoin price has risen, the demand for GBTC has not risen to the same extent. Even the current discounted rate is not viewed as a bargain by many institutional investors.
When the BTC rate fell sharply, the GBTC premium was around -20 percent.
“Although the 20 percent discount has now decreased in May, GBTC is still trading at a large discount (-10 percent),” said Humiston.
“As soon as demand picks up again, which apparently has not yet been the case, this discount will likely wane. Because market participants will take the opportunity to buy $ BTC at a discount.”
Financing rates lag behind the share price development
The current Bitcoin market structure also has low open interest in Bitcoin futures and funding rates are lower than expected.
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These two aspects are a clear difference to the start of the bull run in 2020 and, in view of the price gains over the past month, are more of a contradiction.
“In the time that $ BTC has moved from $ 30,000 → $ 48,000, the open interest has decreased and the Bitcoin funding rate is still relatively low (albeit positive),” continued Humiston.
“Neither of them really followed the massive surge in BTC, which is surprising and not exactly normal.”
Nonetheless, funding rates are now more positive than ever since the share price slump in May.