Bitcoin fell more than 20 % since the launch of its first exchange-traded funds investing directly in the token, as speculators became more conservative about how much this new product may impact it, according to a Bloomberg report.
It peaked at $49,021 on the day that ETFs from issuers, including BlackRock Inc. and Fidelity Investment began trading. Bitcoin was sold for $38,860 as of Tuesday in New York and dropped by 20.7% compared to the day’s intraday maxima.
With the relatively bearish sentiment in place, price levels are around $38,000 and $36,000.
Just nine new US spot Bitcoin funds began trading on January 11, while the $22 billion Grayscale Bitcoin Trust — or GBTC –, already a public company, transformed from a closed-ended structure into an ETF. About $1.2 billion flowed into the group from increasing inflows in the first six days, per Bloomberg Intelligence Senior ETF Analyst Eric Balchunas writing on X.
The bulk of this flow went to BlackRock’s iShares Bitcoin Trust and the Fidelity Wise Origin Bitcoin Fund, while $2.8 billion left the Grayscale fund, according to Balchuna’s tweet. The list of sellers included the bankrupt crypto exchange FTX, which sold most shares in its Grayscale vehicle.
“Though these conditions provided hurdles to the leading cryptocurrency, according to Fundstrat Global Advisors LLC head of digital-asset strategy Sean Farrell. Bitcoin has been addressed with a more challenging macro environment during the past fortnight, as evidenced by the rise in rates and the strengthening dollar along with significant selling pressure from traders unwinding their GBTC arbitrage positions other than FTX.
The potential dumping by FTX may take away a supply surplus, hinting at an imminent decline in intensive selling pressure from GBTC, the analyst said.
The report cites the fact that Bitcoin, the world’s largest cryptocurrency, rose almost 160 percent last year, outperforming traditional assets like stocks amid speculations that these ETFs would usher a new era in which institutional and individual investors investing en-masse into bitcoins.
After its brief recovery, Bitcoin managed to reach the lowest level since December 4, standing at $39,938.00, resulting in a – 3.98 % decrease. Ethereum, the second largest cryptocurrency after Bitcoin, witnessed a decline of 6.37 percent, hitting $2,328.30.
The token has been falling back in it since the new year season and following world markets. Other tokens like Ether and BNB dropped considerably, with Bitcoin, the biggest cryptocurrency that is now about $30,000 below its all-time high seen during the pandemic last year of nearly $69,000.
“GBTC outflows have created a demand channel in the market that needs to be rebalanced before it will enable us to see true price discovery,” said Leah Wald, chief executive officer of digital-asset investment firm Valkyrie Investments. Bloomberg reported this on June 18th, 2019
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