The world's largest cryptocurrency Bitcoin (BTC) continues to face selling pressure following the approval of the Bitcoin ETF. In the last few hours, BTC price plunged another 8%, sliding to levels of $42,500 at press time. Some market analysts also describe the launch of the Bitcoin ETF as a failure.
What is behind the Bitcoin price drop?
The recent decline in Bitcoin prices is partly due to significant selling of Grayscale Bitcoin Trust (GBTC) shares, noted Anthony Scaramucci, founder of SkyBridge Capital. In an interview with Bloomberg Television, Scaramucci revealed an observed trend of significant Grayscale selling, noting that holders are converting their shares from a trust to an ETF format. The recent approval of ETFs by the US Securities and Exchange Commission prompted many to switch to these lower-cost alternatives, leading to sell-offs to realize losses.
The Grayscale Bitcoin Trust, founded in 2013, posted record first-day sales of $2.3 billion on Thursday, marking a historic moment for ETFs. Despite being a popular avenue for Bitcoin exposure, the trust's shareholders opted for low-cost alternatives given the losses. After rising to a two-year high above $49,000 on Thursday, Bitcoin suffered a decline below $43,000 on Friday.
However, Grayscale's head of research, Zach Pandl, has defended his company's position. He added that selling one Bitcoin product to purchase another should have no impact on the Bitcoin price.
GBTC shares fell 5.2% to close at $38.58 on Friday. While GBTC shares saw an impressive 300% rise last year, Bitcoin's rise was almost 160% over the same period, highlighting the trust's significant role in Bitcoin investment strategies.
FTX is also behind the Bitcoin sale?
Interestingly, Scaramucci also puts an FTX perspective behind the recent Bitcoin price sell-offs. He added that FTX's bankruptcy mass added to the cryptocurrency's downward pressure. FTX, once one of the largest crypto exchanges, filed for bankruptcy in 2022 amid a broader market crash, and the estate is currently liquidating significant crypto assets.
This sell-off, along with the recent approval of Bitcoin Exchange Traded Funds (ETFs), has contributed to increased selling activity in the market. Scaramucci expects the excess supply caused by the sale of FTX's bankruptcy estate to likely end in the next six to eight trading days.
In addition, he pointed to a notable development in the marketing of ETFs on Wall Street. A quiet period in which Wall Street refrained from marketing these ETFs is likely to end in about eight days. This signals a possible shift in momentum as Wall Street begins to actively promote and market Bitcoin ETFs, ushering in a new phase in the market landscape.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.