Crypto Market Sentiment Remains Optimistic Despite Bitcoin Price Drop
In the last seven days, Bitcoin (BTC) has experienced a price drop of 10% since the debut of Bitcoin spot ETFs in the USA. The price of BTC went from $48,625 a week ago to $42,450 at the time of writing. However, despite this unexpected drop, the sentiment in the crypto market remains optimistic. This is evident from the Bitcoin Fear and Greed Index, which currently stands at 63 out of 100.
Bitcoin Fear and Greed Index is 63 – Greed
Current price: $42,400 pic.twitter.com/cvANStK9S7— Bitcoin Fear and Greed Index (@BitcoinFear) January 18, 2024
Approval of Bitcoin Spot ETFs by SEC
The United States Securities and Exchange Commission (SEC) officially approved all 11 applications for Bitcoin Spot ETFs on January 10, 2024. This means that Bitcoin Exchange-Traded Funds by various companies such as ARK 21Shares, Invesco, Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton have become regulated.
Following the approval, the price of Bitcoin reached a high of $48,625 on January 11th but started to decline on January 12th. The price dropped to a minimum of $41,715 on January 15th before recovering to the current price.
Crypto Market Sentiment Confirmed by CoinDesk 20 Perpetual Futures
CoinDesk has announced that the bullish trend in crypto market sentiment is confirmed by its CoinDesk 20 (CD20) perpetual futures. CD20/USDC is traded at a premium compared to the index price, indicating optimism in the market. This information comes from the perpetual futures market of the Bullish stock exchange linked to the CoinDesk 20 index.
Perpetual futures are futures without an expiration date and have a funding rate mechanism that ensures the price aligns with the underlying index. A positive financing rate suggests bullish market expectations, while a negative rate suggests the opposite.
Grayscale’s Role in Bitcoin Price Decline
On January 15th, Grayscale, the manager of Grayscale Bitcoin Trust (GBTC), transferred 9,000 BTC in anticipation of an upcoming sale. This move caused an outflow of funds for Grayscale as investors sold their holdings. The previous week, Grayscale had already sold 2,000 bitcoins, bringing the total to 11,000 BTC on January 15th. As a result, GBTC’s holdings were reduced to less than 610,000 BTC, leading to a sudden drop in BTC by 2%.
Hot Take: Crypto Market Remains Optimistic Despite Bitcoin Price Drop
Despite a recent drop in Bitcoin’s price following the debut of Bitcoin spot ETFs in the USA, the sentiment in the crypto market remains optimistic. The Bitcoin Fear and Greed Index shows a score of 63 out of 100, indicating that market participants are still confident in the future of Bitcoin. Additionally, the positive financing rates in the CoinDesk 20 perpetual futures market further support the bullish sentiment. While Grayscale’s recent transfers and sales may have contributed to the price decline, Bitcoin has shown signs of recovery. Overall, it seems that the crypto market continues to hold a positive outlook despite short-term fluctuations.
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