Bitcoin Slides as Speculative Demand Fades
Bitcoin has reached its lowest point since mid-December due to the decline in speculative demand caused by the diminishing hype surrounding new exchange-traded funds (ETFs). The cryptocurrency is currently in the red since the beginning of 2024, briefly dipping below $40,000 before settling at $41,160. Other smaller tokens like Ether, Solana, and Polkadot are also struggling.
Optimism Fueled Bitcoin’s Surge Last Year
Last year, Bitcoin experienced a significant surge of 157% due to optimism surrounding the launch of the first US ETFs that directly hold the token. The digital asset market also benefited from expectations of looser monetary policy. However, traders are now evaluating how much money these ETFs will attract and adjusting their expectations for interest rate cuts.
New Spot Bitcoin ETFs Enter the Market
Last week, nine new spot Bitcoin ETFs were launched, including offerings from BlackRock Inc. and Fidelity Investments. Additionally, the $25 billion Grayscale Bitcoin Trust converted into an ETF from a closed-ended structure. BlackRock’s iShares Bitcoin Trust has attracted over $1 billion in investor inflows, while the Fidelity Wise Origin Bitcoin Fund has seen approximately $880 million. On the other hand, Grayscale’s Bitcoin fund has experienced outflows of around $1.6 billion since transitioning into an ETF.
Hot Take: Crypto Market Corrects After Run-Up
The recent correction in Bitcoin’s price following a significant increase is considered normal by industry experts like Greg Moritz from AltTab Capital. As the hype around new ETFs subsides and traders assess market trends, it is expected that cryptocurrencies will continue to experience fluctuations. The performance of these ETFs and the direction of monetary policy will play a crucial role in shaping the future of the crypto market.
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