The BTC Price Correction and its Cause
The price of Bitcoin has continued to decline, dropping by 3.45% on Thursday and falling below $41,000. This has resulted in a weekly loss of over 10% for Bitcoin, with its current trading price at $40,896 and a market cap of $805 billion.
One major factor behind this price correction is the significant outflows from the Grayscale Bitcoin Trust (GBTC) following the launch of spot Bitcoin ETFs. As a result, Grayscale has been forced to liquidate a large number of Bitcoins from its GBTC holdings. Over the past week, a total of $2.2 billion has moved out of GBTC.
Renowned crypto analyst Scott Melker has clarified that Grayscale is not actively selling off its Bitcoin holdings but is instead responding to individuals selling their GBTC holdings. Melker explains that this is a fundamental aspect of the mechanics associated with an ETF.
Positive Developments for Bitcoin ETFs
Despite the price correction, the launch of spot Bitcoin ETFs has seen healthy development. These ETFs have experienced increased trading volumes and inflows into multiple offerings. The BlackRock spot Bitcoin ETF, for example, has received over a billion in inflows within just four days of its launch.
Bloomberg’s senior ETF strategist, Eric Balchunas, has highlighted the significant volume increase for these Bitcoin ETFs compared to previous days. This unexpected upswing in volume contradicts the typical pattern seen after hyped-up launches. Balchunas sees this as a positive sign and expresses optimism about the performance of these new ETFs in the market.
A Reversal in Grayscale Bitcoin Trust Discount
Eric Balchunas also notes that there has been a reversal in the discount on the Grayscale Bitcoin Trust (GBTC), with the discount climbing back up to 96 basis points. This shift could be attributed to selling pressure. Despite this, Balchunas remains optimistic about the overall performance of the Bitcoin ETFs, which have already surpassed Silver with over $27.5 billion in assets.
Hot Take: Bitcoin Faces Selling Pressure Amidst Grayscale Outflows
The recent price correction in Bitcoin can be attributed to significant outflows from the Grayscale Bitcoin Trust (GBTC) following the launch of spot Bitcoin ETFs. However, it’s important to note that Grayscale is not actively selling off its Bitcoin holdings but is responding to individuals selling their GBTC holdings. This correction comes as a result of the mechanics associated with an ETF.
Despite this correction, the spot Bitcoin ETFs have shown healthy development with increased trading volumes and inflows into multiple offerings. The performance of these new ETFs has defied expectations, and optimism remains high for their success in the market.
By
By
By
By
By
By