Bitcoin Plunges Below $43,000
The price of Bitcoin (BTC), the largest cryptocurrency by market capitalization, experienced a significant drop, falling below $43,000. However, it has since recovered and is currently trading at $43,317.92. This 5.90% plunge in the last 24 hours can be attributed to the recent dump-off of Grayscale Bitcoin Trust (GBTC) shares.
GBTC Dump and BTC Slump
Ran Neuner, a veteran crypto trader and CEO of Blockchain Investment Fund and Advisory service, explains that the price decline is a result of people selling their GBTC shares. Previously, over $25 billion worth of Bitcoin was held in GBTC for years without an option to sell. When redemption opened after the SEC approved spot BTC ETF, holders saw it as an opportunity to exit the offering, causing the Bitcoin market to be flooded with sales.
Bitcoin Price is dumping as people are dumping their GBTC shares.
GBTC held $25bn+ worth of Bitcoin that has been locked up for years with no option to be sold. As soon as the redemption option opened, for the first time people are starting to exit – as they exit the Bitcoin… pic.twitter.com/EqHgpHyVdd
— Ran Neuner (@cryptomanran) January 12, 2024
Neuner believes that the large GBTC holding of $25 billion will continue to create selling pressure on the market. If just 20% of it is redeemed, that would result in $5 billion worth of sales. He also suggests that the current demand from ETF providers may not be enough to absorb this amount, causing the price of Bitcoin to decrease further. It’s important to note that other cryptocurrencies, including altcoins, have also been affected by this bearish movement.
Bitcoin Revival Expected
While the immediate reaction to the GBTC dump may be negative for Bitcoin, it is likely to be short-lived. In the long term, Bitcoin is expected to respond positively to the SEC’s approval of various spot BTC ETF applications. Many predictions have suggested that Bitcoin will reach new highs with the introduction of Bitcoin ETFs and even before this recent dip, it had been eyeing $50,000 levels.
Furthermore, with the upcoming Bitcoin halving event and expectations of a 6,000% increase, there is still optimism for Bitcoin’s future. However, some critics like Jim Cramer believe that the hype around spot BTC ETFs is fading and that Bitcoin has reached its peak.
Hot Take: Bitcoin’s Price Plunge Explained by GBTC Dump-off
The recent drop in Bitcoin’s price can be attributed to the selling off of Grayscale Bitcoin Trust (GBTC) shares. As these shares became available for redemption after years of being locked up, holders saw it as an opportunity to exit and sell their Bitcoin holdings. The large amount of BTC held in GBTC created significant selling pressure on the market. While this may cause short-term volatility in Bitcoin’s price, in the long term, the approval of spot BTC ETF applications by the SEC is expected to have a positive impact on Bitcoin’s price. The upcoming Bitcoin halving event and potential for significant price increases also contribute to the overall optimism surrounding Bitcoin’s future.
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