Bitcoin Falls Below $40,000 as ETF Outflows Continue
Bitcoin (BTC) has dropped below $40,000, reaching a price last seen in December 2023. This downward trend is primarily attributed to a wave of outflows from Bitcoin spot ETFs, which have offset the inflows from new ETF products.
Liquidations and Trading Activity
In the past 24 hours alone, over $236 million worth of trades have been liquidated, with $208 million coming from long positions. Coinglass reported that more than 90,000 traders were liquidated during this period, with the largest liquidation occurring on Bybit for a $5 million BTC/USD trade.
The Impact of Bitcoin Spot ETFs
Ever since Bitcoin spot ETFs were approved for trading on national securities exchanges on January 10, Bitcoin’s price has been on a downward trajectory. While these ETFs have attracted billions of dollars in inflows, the market has been counteracted by massive outflows from the Grayscale Bitcoin Trust (GBTC).
Selling Pressure from Grayscale
Following its conversion into an ETF, GBTC’s share discount has returned to parity with its underlying BTC holdings. This has resulted in significant profits for early buyers who are now cashing out. As a result, Grayscale is selling over $500 million worth of BTC per day as it redeems its shares.
Hot Take: Bitcoin Faces Pressure from ETF Outflows and Liquidations
Bitcoin’s recent drop below $40,000 can be attributed to the ongoing outflows from Bitcoin spot ETFs and the resulting selling pressure from Grayscale. Despite the inflows generated by new ETF products, the market has been unable to sustain upward momentum. The liquidations of long positions further exacerbated the downward trend. It remains to be seen how these factors will continue to impact Bitcoin’s price in the coming days and weeks. Traders should closely monitor the market and exercise caution during this volatile period.
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