Crypto this week

Bitcoin tests the US$40,000 level as US plans talks with Russia

Bitcoin is testing US$40,000, a key psychological level, as the US plan talks with Russia about military intelligence that suggests an imminent Ukraine invasion, which it denies.

The world's largest cryptocurrency was on track on Friday (Feb 18) to notch its first week of losses since January, putting a halt on the token's recovery from its dramatic year-end slide. The coin was down 5 per cent over the past week after Friday's drop of as much as 1.4 per cent.

Ethereum was little changed on Friday while other popular tokens including Solana and Cardano were in the red, according to CoinGecko.

"Traders are taking some risk off the table as the Ukraine situation is still not resolved and are now moving into safe-haven asset classes such as gold and silver," said Nathan Batchelor, lead Bitcoin analyst for SIMETRI Research.

Tensions in Europe has prompted a rotation into so-called risk-off assets like gold, which has gained over the past 3 weeks. Although referred to as "digital gold", Bitcoin's sensitivity to broader market sentiment has weighed on its hedge appeal often touted by advocates. Instead it has largely followed movements in major stock indexes lately, exhibiting strong correlations with the S&P 500 and Nasdaq 100. BLOOMBERG

Investors stuck in biggest Bitcoin fund flood US SEC with letters

US Securities and Exchange Commission officials have nearly 200 new pen-pals.

More than 170 letters have been submitted to the agency in February following a tweet from Grayscale Investments LLC encouraging people to share their thoughts on the firm's application to convert the US$26 billion Grayscale Bitcoin Trust (ticker GBTC) into an exchange-traded fund. That compares to just 14 from when a filing was made in October for the change, through the end of January.

The common denominator across the 200 letters is the SEC's reluctance to approve an ETF that physically holds Bitcoin. US regulators allowed the first crypto derivatives-based products to begin trading this past October, but have repeatedly denied applications for a spot Bitcoin ETF. That's exacerbated a persistent issue for GBTC - because it's a trust, not an ETF, shares can't be redeemed to align with shifting demand. GBTC has traded at a discount to the value of its underlying Bitcoin for months.

The trust had been a favourite because it was one of the earliest ways to invest in Bitcoin indirectly and had allowed participants to exploit an arbitrage opportunity when the price was soaring. BLOOMBERG