Bitcoin dropped below $41,000 in the last 24 hours before making a recovery to rise above that level once again. This has become the current reality of the flagship crypto token’s price, which has continued to decline since the Spot Bitcoin ETFs were approved. This is surprising considering that these funds were projected to help boost Bitcoin’s price upon launch.
Why Bitcoin’s Price Could Be Dipping
Bloomberg analyst James Seyffart provided insight into what could be the reason for Bitcoin’s declining price as he revealed that Grayscale’s GBTC has experienced an outflow of $2.2 billion since its conversion to a Spot Bitcoin ETF. Crypto analytics platform Arkham Intelligence also revealed that Grayscale had moved 9000 BTC from their wallets to Coinbase, suggesting an imminent sale.
A sell pressure of such magnitude would no doubt affect Bitcoin’s price, and that seems to be a plausible explanation for why Bitcoin’s price has declined as of late. The CEO of Jan3 and Bitcoiner, Samson Mow, also echoed similar sentiments as he mentioned that the GBTC sell pressure was pushing prices down.
However, Mow believes that this trend “won’t be a long drawn out process,” as he predicts that many of GBTC’s investors won’t be able to offload their stocks because the “tax hit is too big.” JP Morgan will, however, beg to differ as a research report by the bank estimates that up to $3 billion could exit from the GBTC fund with many investors looking to take profit.
Crypto analyst Ash Crypto also recently elaborated on how profit-taking is one of the reasons that GBTC is seeing this significant amount of outflows. He explained that a lot of GBTC investors bought shares in the fund when it was trading at a 40% discount from Bitcoin, and now they are exiting their positions since that discount is now at 0%.
BTC bulls make a play for control | Source: BTCUSD on Tradingview.com
Spot Bitcoin ETFs Are Actually Living Up To Hype
While Grayscale’s GBTC continues to bleed, other Spot ETFs look to be living up to the hype, with there being an impressive demand for these funds. Nate Geraci, the President of the ETF Store, revealed that two (IBIT and FBTC) out of the nine Spot ETFs (excluding GBTC) already hit $1 billion in assets under management (AUM) just after five trading days.
Specifically, BlackRock’s IBIT (iShares Bitcoin Trust) was the first to achieve this milestone in just four trading days. Commenting on how impressive this was, Bloomberg analyst Eric Balchunas noted that only two other ETFs ($GLD and $BITO) had done this before now, and none of those funds faced such competition as IBIT did on launch day.
The demand for Spot ETFs is evidently there, seeing that two spot Bitcoin ETFs have already achieved a record that was held by only two other ETFs before now.
Featured image from Yahoo Finance, chart from Tradingview.com