Bitcoin Slides as Crypto Market Reacts to ETF Launch
Bitcoin experienced a 6% drop on Friday, marking the end of a significant week for the cryptocurrency. The week saw the launch of 11 bitcoin exchange-traded funds (ETFs) in the U.S., following years of institutional acceptance battles for the asset. The price of bitcoin reached a high of $49,058.48 on Thursday, its highest level since December 2021, before ending the week around $43,707.85. While bitcoin declined, ether remained relatively stable after earlier gains. Ether rose 18% during the week and reached highs not seen since May 2022.
Investors Shift Focus to Ethereum Following ETF Approval
Investors rotated their focus from bitcoin to ether after the widely expected approval of bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC). Alex Saunders, an analyst at Citi, explained that investors expect ether to also receive ETF approval, leading to its rally surpassing that of bitcoin.
Spot ETH ETF Decisions Await SEC Approval
The SEC is set to make decisions on spot ETH ETF applications starting in May. Firms such as BlackRock, Invesco, Ark, VanEck, and Grayscale are among those awaiting approval. Grayscale intends to convert its existing Ethereum Trust (ETHE) into an ETF. Ether’s performance in 2023 has lagged behind bitcoin’s with a rise of only 90% compared to bitcoin’s 157%.
Bitcoin ETFs Expected to Boost Price Over Time
Many anticipated that the approval of bitcoin ETFs would lead to a sell-off due to high unrealized profits among investors and miners. However, market participants agree that ETFs will benefit the bitcoin price in the long run. It may take time for this effect to fully play out as newcomers to the crypto market become more familiar with the asset and gradually enter the market.
Litecoin and Crypto Equities
Litecoin, which shares a similar value proposition to the original vision of bitcoin as a medium for everyday payments, experienced a 14% weekly gain. However, crypto equities, including Coinbase and MicroStrategy, declined along with bitcoin. Miners such as CleanSpark, Iris Energy, Marathon Digital, and Riot Platforms also faced significant losses.
Hot Take: Bitcoin Sees Volatility as ETFs Launch
The launch of bitcoin ETFs in the U.S. brought both excitement and uncertainty to the crypto market. While some expected a sell-off following the approvals, others believe that ETFs will ultimately benefit the bitcoin price. Investors have shifted their focus from bitcoin to ether, anticipating its own ETF approval. The SEC’s decisions on spot ETH ETF applications are eagerly awaited. Overall, the market remains volatile as it adjusts to these new developments.
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