BTC Price Drops More Than 20% Below $40,000 After Bitcoin ETF Approval
Bitcoin has fallen almost 20% since January 11, when the first exchange-traded funds (ETFs) that invested directly in the token were launched. BlackRock Inc. The digital asset rose to $49,021 on the day of the launch of ETFs offered by organizations such as Fidelity Investments and Fidelity Investments. However, earlier today, Bitcoin was trading at $39,718, down 19% from the peak reached that day.
BTC Price Drop Leads to Strong Liquidations
According to data from CoinGlass, amid the BTC price drop and a widespread sell-off in the crypto market, a total of $225 million in liquidations took place in the last 24 hours.
Over the past two weeks, Bitcoin has faced challenges from tougher macroeconomic conditions, as evidenced by rising interest rates and a strengthening dollar. Additionally, there was significant selling pressure as investors removed GBTC arbitrage positions and liquidated FTX bankruptcy estate holdings.
Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors LLC, stated that FTX’s sales could eliminate the excess supply and that “the intense selling pressure from GBTC may soon decrease.”
Bitcoin ETFs See Strong Inflows
Bloomberg analysts reported Strong trading activity in US spot Bitcoin ETFs saw trading volume exceed $2 billion on January 22, with GBTC contributing more than half of that ($1,013 billion). Fidelity’s trading volume outpaced BlackRock for the second day in a row. Approximately 35% of GBTC outflows found their way into nine other spot Bitcoin ETFs.
Lookonchain data reveals that BlackRock’s spot Bitcoin exchange-traded fund (ETF), iShares Bitcoin Trust, received a significant inflow of 4,808 BTC from Coinbase Prime, equivalent to approximately $194.4 million. There is currently a total of 33,431 BTC in the iShares Bitcoin Trust, worth approximately $1.33 billion.
This development coincides with the start of trading of nine new US spot Bitcoin funds on January 11. Additionally, Grayscale Bitcoin Trust (GBTC), which manages $22 billion in assets, transitioned from a closed-end structure to an ETF. Notably, the group experienced a net inflow of $1.2 billion in the first six days of the transition.
Among the newly launched funds, BlackRock’s iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund emerged as the main recipients of increased investor interest, capturing a significant share of the total flow. Simultaneously, the Grayscale fund witnessed an outflow of $2.8 billion during this period.
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Bhushan is a FinTech enthusiast and has a good ability to understand financial markets. His interest in economics and finance draws his attention to the emerging Blockchain Technology and Cryptocurrency markets. He is in a constant learning process and motivates himself by sharing the knowledge he has acquired. In her spare time, she reads thriller novels and sometimes explores her culinary skills.
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