Why Has Bitcoin (BTC) Price Dropped 15% Since ETF Approval? ChatGPT rival gets in touch

Perhaps the most significant development regarding BTC's global validation in its 15-year history came last week when the U.S. Securities and Exchange Commission finally gave the green light to nearly a dozen spot Bitcoin ETFs to trade in financial markets.

These approvals were long awaited by both the crypto community and traditional investors, but it turned out to be a “sell-the-news” event, following which the price of the underlying asset fell within a week or so fell by 15%.

Why this?

Ahead of the approvals, various experts speculated whether they were already priced in, as BTC had risen from around $30,000 to around $45,000 in the months before. Those who believed that Bitcoin would fall immediately after the ETFs launched in US markets were initially disappointed when the asset rose to over $49,000 last Thursday.

However, the situation quickly changed as the price plunged by three grand by the end of the US trading day and by another $4,500 on Friday. Since then, BTC has been unable to recoup much of its losses and is currently struggling below $42,000.

According to Perplexity – a popular ChatGPT competitor – one of the reasons for these declines is profit-taking by investors who had expected a rise before the ETF approvals and decided to cash out some of their holdings.

Other possible reasons include: “Market expectations may not have immediately met reality as some investors may have overestimated the immediate impact of the ETF approvals” and confusion over the nature of the ETF, such as how creation and redemption works.

“In addition, increased market volatility following the approvals and liquidation of leveraged positions may have influenced the price of Bitcoin,” Perplexity concluded.

There is some good news

Although analysts' opinions are divided on the immediate impact on BTC's price following the SEC's approval of the ETFs, most are sure that the long-term impact on the cryptocurrency's price will be quite positive. Initial research shows that a total of over $1 billion has flowed into the 11 ETFs, meaning interest is quite high.

The popular AI chatbot expressed a similar opinion, saying that the price of BTC could actually reverse its recent course, especially given the upcoming halving that was scheduled to take place in April.

“Despite these short-term fluctuations, some analysts and investors still expect significant upside in the price of Bitcoin over time, driven by ETF approvals and other developments in the crypto world.”

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