Arguably the most anticipated development in the cryptocurrency industry of the last decade became a reality earlier this week when the U.S. Securities and Exchange Commission gave the green light to numerous spot Bitcoin ETFs.
Eleven such products hit the market on Thursday, with volumes exceeding $4 billion on the first day of trading. Against this backdrop, BTC faced overwhelming volatility, resulting in a price drop from over $49,000 to below $42,000.
Did it have to happen?
Bitcoin rose above $49,000 for the first time in nearly two years on Thursday, just hours after the ETFs were launched in US markets. Hours later, the asset fell by three grand. The situation worsened on Friday as the cryptocurrency crashed to $41,500. This meant the asset lost over $7,000 in just over a day.
BTCUSD. Source: TradingView
Ahead of the ETF approvals, many experts speculated whether BTC's price was priced in as it skyrocketed more than 150% in 2023. The sell-the-news camp was quite active and there were numerous predictions that the cryptocurrency would fall after the ETFs hit the markets.
So far they seem to be right. In fact, history shows that something similar happened in August 2023. Europe's first spot Bitcoin ETF was launched on Euronext Amsterdam, and the price of BTC collapsed by $1,500 within the first few days.
Back in late 2021, the SEC gave the green light to several futures Bitcoin ETFs, and the impact was similar, with a massive price drop in the following weeks and months.
Shades of gray behind it?
After the ETFs launched on Thursday, volumes surged to over $4 billion, with Grayscale's ETF taking the center stage with the biggest numbers. However, this could actually be the reason for the price drop, as suggested by SkyBridge Capital founder Anthony Scaramucci.
“There seems to be a lot of Grayscale selling,” he said, which might be somewhat understandable given Grayscale's higher-than-average fees of 1.5%. Just for reference, most ETF competitors offer somewhere between 0.25% and 0.4%.
Grayscale's GBTC Trust was launched over a decade ago and was the largest Bitcoin fund with over $28 billion in assets under management. It was converted into a spot Bitcoin ETF along with the other approvals and actually saw the largest opening day turnover with a volume of $2.3 billion.
“The second thing we see is FTX’s bankruptcy estate unloading in the ETF announcement. There is currently a large sales volume in Bitcoin. “I expect the supply overhang to be resolved in the next six to eight trading days,” Scaramucci concluded.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.