Take a look at the following chart depicting ETH and BTC price action over the last two weeks.
ETH was a nice trade over that span while BTC was grinding lower. Grayscale's lack of BTC unlockings since the end of December 29th meant the biggest buyers in the market were taking a hiatus.
When the largest buyer of the market sits on the sidelines then price keeps grinding lower as sellers chew up the buy side of the order book.
ETH on the other hand did have some buyers according to the amount of inflows seen six months ago. Looking at the bar graph below you can see it in the first two bars within the red box.
What has quickly come to be known as the "Grayscale Effect" is seen when Grayscale Trust investors are purchasing assets on the spot market as they unlock their shares. These investors are predominately price agnostic with a main goal of owning more of the asset in question.
Shares unlock, shares get sold while the asset is purchased on spot, wait for the next window to send assets to Grayscale, and wait six months for the shares to unlock. No shorting, no borrowing of assets, nor any complicated way of going about it. Just simply sell shares and buy the asset on spot simultaneously. That's it, no need to make this anymore complicated.
Going back to the chart above, ETH witnessed some unlocking buyers the past two weeks and is in part why there was more strength compared to BTC.
Looking forward it appears we can get ready for some BTC action. If this bar graph holds true, the bottom is likely in for BTC. And I don't know about you, but look at the August 10th data point. That's one of the largest weeks of inflows in ten months. Let's hope this theory continues to hold water.
