Bitcoin Falls 20% After Approval of Spot Bitcoin ETF
Bitcoin has experienced a significant drop of over one fifth since reaching its peak earlier this month. The decline occurred after the United States approved its first spot bitcoin exchange traded fund (ETF). Investors who had purchased bitcoin in anticipation of the approval sold their holdings after the confirmation, resulting in the price decrease.
Funds Flow into New Spot Bitcoin ETFs
Nearly $4 billion has been invested in the newly launched spot bitcoin ETFs, with BlackRock and Fidelity being the main beneficiaries, according to Deutsche Bank analysts. However, $2.8 billion of these funds were withdrawn from Grayscale, which previously dominated the regulated bitcoin investing market but has now transitioned into an ETF.
Sale of Assets from Bankrupt Crypto Exchange Contributes to Price Decline
The decline in bitcoin’s price was further exacerbated by the sale of assets from bankrupt crypto exchange FTX, as reported by Deutsche Bank. Additionally, shares in Coinbase, the leading U.S. crypto exchange, dropped approximately 4% in pre-market trading after JPMorgan downgraded the stock due to concerns that the approval of bitcoin ETFs may not meet market participants’ expectations.
Other Crypto Stocks Under Pressure
Aside from Coinbase, other crypto stocks are also facing downward pressure as a result of recent developments in the cryptocurrency market.
Hot Take: Bitcoin Faces Significant Price Decline Following Spot Bitcoin ETF Approval
The recent approval of spot bitcoin exchange traded funds (ETFs) by the United States has had a major impact on the price of bitcoin. The cryptocurrency experienced a significant drop of over one fifth since its peak earlier this month. This decline was driven by investors selling their holdings after their expectations were met. Additionally, the influx of funds into new spot bitcoin ETFs has reshaped the market, with BlackRock and Fidelity benefiting the most. The sale of assets from bankrupt crypto exchange FTX and the downgrade of Coinbase shares by JPMorgan have further contributed to the downward pressure on bitcoin and other crypto stocks.
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