Bitcoin market catalysts on Galaxy’s charts

Galaxy Research’s Alex Thorn expects a positive market response if House-backed crypto bills prompt Senate action

August 22, 2023 07:39 am

Sergey Nivens/Shutterstock, modified by Blockworks

Bitcoin’s latest market fluctuations have left seasoned investors unperturbed.

Last week, within a span of 2 hours, bitcoin (BTC) dropped over 10% to about $25,300. This marked the most significant BTC deleveraging instance since FTX’s downfall in Nov. 2022.

After the dip, Galaxy Research observed that smaller bitcoin addresses boosted their holdings. On-chain data indicated addresses with up to 10 BTC added more to their balances.

“Long-term holders have been net accumulating (on a rolling 30d basis) since March,” Galaxy’s Alex Thorn said in a note published Monday.

Looking ahead, Thorn identified three major factors that could amplify bitcoin’s volatility throughout the remainer of 2023.

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Grayscale v. SEC outcome, other court cases

After the US Securities and Exchange Commission turned down Grayscale’s request to transform its bitcoin trust into an exchange-traded fund, Grayscale promptly took legal action and filed a petition for review.

Grayscale views the upcoming verdict in this matter as a near-term potential catalyst.

“A win for Grayscale is unlikely to result in the approval of GBTC’s conversion to an ETF, but could require the SEC to reconsider Grayscale’s application,” Thorn wrote.

The SEC recently sued Coinbase and Binance for alleged securities violations.

Decisions regarding dismissal requests in the SEC’s lawsuit against Coinbase and progress in several cases targeting Binance might also influence the market, Thorn noted.

Crypto regulatory bills

The US House is presently reviewing bills aiming to establish regulations geared towards crypto market structure and the issuance of stablecoins.

Thorn believes that if these bills gain enough support in the House to prompt Senate action, the crypto markets could see a positive reaction.

Bond markets and macro events

A deeper slump in the bond markets could pose challenges for risk assets, including bitcoin, Thorn wrote in the note.

However, macro events like additional banking system issues or ratings agency downgrades might boost bitcoin, similar to the uptick after Silicon Valley Bank’s collapse in March, he added.

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