Bitcoin
Other cryptocurrencies fell on Monday as outflows from the largest bitcoin spot trading fund weighed on prices. As prominent ETFs continue to present a “sell the news” dynamic, traders are bracing for a distinct correction across cryptocurrency markets.
Bitcoin’s price has fallen 3% in the past 24 hours to $40,500, a far cry from the largest cryptocurrency’s recent peak above $48,000, which hit its highest levels since early 2022. Bitcoin surged to multi-year highs amid a trading frenzy around the world. US approval of spot Bitcoin ETFs, a long-awaited catalyst that has proven to be a “buy the rumor, sell the news” trend among investors, despite the long-term bullish state.
“Bitcoin approaches $40,000 as continued selling from Grayscale Bitcoin Trust (GBTC) dampens ETF approval euphoria and leaves investors in a price hangover at the end of the party,” said Anthony Trenchev, co-founder of cryptocurrency lender Nexo. . “Bitcoin’s short-term fate depends on the extent and duration of the GBTC sell-off… and whether or not inflows into the other 10 Bitcoin ETFs act as a counterweight.”
In fact, selling pressure in particular appears to be affecting the Grayscale Bitcoin Trust, an existing bitcoin spot fund that turned into an ETF when the SEC gave the green light to a wave of such funds on January 10.
“We had 100% market share, and we never expected to always have 100% market share,” said Michael Sonnenshein, CEO of digital asset manager Grayscale. Baron In an interview last week.
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“Not surprisingly, with a fund as large as this — $28 billion — you would see some outflows from the product,” Sonnenshein said. At the time, Sonnenshein added, there were outflows worth a few hundred million dollars, but that was directly compared to inflows to other issuers.
However, as capital inflows continue, it appears some bitcoins will leave the ecosystem, with the market capitalization of the Grayscale Bitcoin Trust falling to $25.6 billion as of Friday, with the fund’s shares falling another 2.7% in pre-market. Trading on Monday. This may be further evidence that cryptocurrency traders are looking to lock in gains – and some market participants are bracing for more aggressive selling pressure.
“Bitcoin’s rise can be described as protracted because we have not seen one of the infamous 30%+ price declines since the end of 2022,” Nexo’s Trenchev said. “A decline of this size from the recent peak of $49,000 would take Bitcoin to $34,000.”
Beyond Bitcoin,
ether
– The second-largest cryptocurrency – lost 4% to $2,375. Small tokens or altcoins were also in the red
Cardano
Down 6% and
ribbed
Down 5% Memecoins also fell
Dogecoin
Down 5% and
Shiba Inu
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4% precipitation.
Write to Jack Denton at jack.denton@barrons.com