Bitcoin Price Declines After ETF Launch
Since the introduction of exchange-traded funds (ETFs) investing in Bitcoin on January 11, the cryptocurrency has experienced a nearly 20% decline. On the day the ETFs were launched, Bitcoin reached a peak of $49,021. However, it is currently trading at $39,718, marking a 19% decrease.
Liquidations Totaling $225 Million Amid Price Drop
In the last 24 hours, there have been liquidations totaling $225 million due to the drop in Bitcoin’s price and the broader sell-off in the crypto market, according to data by coinGlass.
The past two weeks have presented challenges for Bitcoin, including rising interest rates and a stronger dollar in the macroeconomic environment. Selling pressure has also come from traders unwinding their GBTC arbitrage positions and the FTX bankruptcy estate liquidating assets.
Sean Farrell from Fundstrat Global Advisors LLC believes that the selling pressure from GBTC may soon subside as the sales by FTX eliminate a surplus in supply.
Strong Inflows for Bitcoin ETFs
Bloomberg analysts have reported that U.S. spot Bitcoin ETFs saw robust trading activity, surpassing $2 billion in volume on January 22. GBTC contributed over half of this volume ($1.013 billion), with Fidelity outpacing BlackRock in trading volume for the second consecutive day. Approximately 35% of GBTC outflows went into nine other spot Bitcoin ETFs.
BlackRock’s iShares Bitcoin Trust received a substantial influx of 4,808 BTC (approximately $194.4 million) from Coinbase Prime. The trust now holds a total of 33,431 BTC worth approximately $1.33 billion.
These developments coincide with the launch of nine new US spot Bitcoin funds and the transition of the Grayscale Bitcoin Trust to an ETF. BlackRock’s iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund have captured a significant portion of the increased investor interest, while the Grayscale fund experienced a $2.8 billion outflow.
Hot Take: Bitcoin Faces Price Decline After ETF Launch
The introduction of exchange-traded funds (ETFs) investing in Bitcoin has led to a significant decline in its price. Despite reaching a peak of $49,021 on the day of the ETF launch, Bitcoin is currently trading at $39,718. This drop has also resulted in liquidations totaling $225 million in the past 24 hours. While challenging macroeconomic conditions and selling pressure from GBTC and FTX have contributed to this decline, there are signs that the selling pressure may soon subside. Strong inflows have been observed for Bitcoin ETFs, with BlackRock’s iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund receiving substantial investments. However, the Grayscale fund has experienced significant outflows during this period.
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