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2024 has already proven to be a wild ride for Bitcoin investors. In what is likely the most exciting financial product launch in history, the SEC approved ten spot Bitcoin ETF products for trading on US marketplaces.
In response, BTC prices rose to a new multi-year high, reaching $49,102. The market then fell 18% over the weekend, reaching a new annual low of $40,236.
As with any major event, Bitcoin owners like to debate whether it was priced in or not.
In this regard, Julio Moreno, head of research at CryptoQuant, debunks the popular narrative that the Bitcoin price drop was caused by Grayscale's GBTC selling Bitcoin.
There is a narrative circulating that the current Bitcoin price correction was due to GBTC selling Bitcoin. IS NOT.
GBTC has sold about 60,000 Bitcoin. The other ETFs combined have net purchased about 72,000 Bitcoin.
The sale was made by Bitcoin holders (short-term traders and…)
— Julio Moreno (@jjcmoreno) January 19
Before converting from a trust to an ETF, Grayscale Bitcoin Trust (GBTC) was one of the few options for stock traders in the United States that could participate in Bitcoin price fluctuations without having to purchase the actual cryptocurrency.
While GBTC experienced notable outflows following its inclusion in an ETF, some of this was due to investors switching to ETFs with lower fees.
Moreno highlighted that while GBTC sold about 60,000 Bitcoins, other Bitcoin ETFs net bought about 72,000 Bitcoins, offsetting Grayscale's GBTC BTC sales.
He attributes Bitcoin price volatility to selling by Bitcoin holders (short-term traders and whales) taking profits after last year's surge, and points out that ETF approval may just be the “sell-the- News” event.
What on-chain data says
According to on-chain analytics firm Glassnode, Bitcoin's price decline may have been caused by both derivatives leverage and spot profit-taking.
However, several metrics in both the on-chain and derivatives space suggest that a significant portion of Bitcoin investors viewed the ETF approval as a sell-the-news event.
According to Glassnode, while there are other important factors behind the interim volatility, both the futures and options markets have seen a significant increase in open interest (OI) since mid-October.
Open interest in both markets remains near multi-year highs, showing that leverage is increasing and becoming an increasingly dominant force in the markets.
At the time of writing, BTC is up 0.58% to $41,543 in the last 24 hours, according to CoinMarketCap data.
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