The advent of 2024 has ushered in a rollercoaster ride for Bitcoin investors, marked by the SEC’s approval of 10 spot Bitcoin ETF products for trading in U.S. markets—a milestone that stirred significant market excitement.
In response to this development, Bitcoin’s price surged to a new multi-year high, reaching an impressive $49,102. However, the ensuing weekend witnessed an 18% decline, with Bitcoin touching fresh year-to-date lows at $40,236.
Amidst the market turbulence, the debate raged among Bitcoin holders regarding whether the price drop was a result of the anticipated event being “priced in” or not. Julio Moreno, the head of research at CryptoQuant, challenges the prevailing narrative attributing the Bitcoin price drop to Grayscale’s GBTC selling Bitcoin.
Before its conversion to an ETF from a trust, Grayscale Bitcoin Trust (GBTC) served as one of the primary options for U.S. stock traders seeking exposure to Bitcoin price movements without directly acquiring the cryptocurrency. While GBTC experienced significant outflows post its transition to an ETF, a considerable portion of these outflows resulted from investors migrating to lower-fee ETFs.
Moreno emphasizes that while GBTC sold around 60,000 Bitcoins, other Bitcoin ETFs collectively acquired approximately 72,000 Bitcoins, effectively offsetting the sales from Grayscale’s GBTC. He suggests that the volatility in Bitcoin’s price is more likely attributed to profit-taking by Bitcoin holders, including short-term traders and whales, who capitalized on gains from the previous year’s surge. In this context, the approval of the ETF may have triggered a classic “sell-the-news” event.
Examining On-Chain Data On-chain analytics firm Glassnode delves into the on-chain and derivatives domains to shed light on Bitcoin’s recent price drop. The analysis indicates that the dip may have been influenced by a combination of derivatives leverage and spot profit-taking.
Glassnode highlights key metrics in both on-chain and derivatives realms, suggesting that a noteworthy segment of Bitcoin investors did treat the ETF approval as a “sell-the-news” occasion. The data reveals a surge in open interest (OI) in both futures and options markets since mid-October, with OI remaining at multi-year highs. This trend indicates a rise in leverage, underscoring its growing influence in the markets.
As of the latest update, Bitcoin is showing a 0.58% increase in the last 24 hours, trading at $41,543, according to CoinMarketCap data. The intricate interplay of market dynamics, on-chain data, and investor sentiment continues to shape Bitcoin’s trajectory in this eventful year.
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