02 March, 2024

Bitcoin Drops 7.03% as Investors Shift to New Low-Fee ETFs, GBTC Shares Decline

2 months ago

13 Jan, 2024

  • Approval of 11 Bitcoin ETFs boosts trading volumes to pre-FTX collapse levels, signaling market confidence.
  • The shift from GBTC to ETFs causes Bitcoin to drop to $42,500, showing investor preference for lower fees.
  • FTX liquidation and new ETFs spike Bitcoin volatility, indicating a dynamic market landscape.

As noted recently by Santiment, a renowned blockchain platform, the cryptocurrency market experienced a significant milestone last Wednesday with the approval of 11 Bitcoin exchange-traded funds (ETFs). This event has sparked a notable surge in Bitcoin trading and movement, resulting in increased trading volumes. These volumes have escalated to levels not observed since the FTX collapse 15 months earlier.

Bitcoin’s market value has recently seen a notable shift, a 7.03% drop to around $42,500 at press time. A major contributing factor to this downturn is the selling of shares in the Grayscale Bitcoin Trust (GBTC). As investors lean towards the newly approved ETFs offering lower fees, traditional trust formats are seeing less preference. Anthony Scaramucci of SkyBridge Capital has noted this emerging trend, underscoring the market’s inclination towards these new ETF offerings.

Grayscale, which has been at the forefront of Bitcoin investment products since 2013, experienced a record first-day turnover of $2.3 billion with its ETF. However, this achievement contrasts with a 5.2% drop in GBTC shares, which closed at $38.58. This downturn starkly contrasts the 300% surge the previous year, when Bitcoin increased by nearly 160%.

Scaramucci also highlighted the influence of the FTX bankruptcy estate on recent Bitcoin price movements. The liquidation of substantial crypto assets by FTX’s estate following its 2022 bankruptcy has been exerting downward pressure on Bitcoin. This factor and the introduction of new ETFs have significantly increased market volatility.

An upcoming change in Wall Street’s approach to marketing these ETFs is also expected to influence the market. The end of a quiet period for ETF marketing is drawing near, heralding a potential shift in Bitcoin’s market dynamics as Wall Street gears up for active promotion of these products.

The Bitcoin market is currently characterized by a mix of factors: introducing new ETFs, strategic shifts by entities like Grayscale, and the residual effects of the FTX collapse. As these factors interplay, they continue to shape the trajectory of Bitcoin and its associated investment strategies.



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