Bitcoin fell below $41,000 in the last 24 hours before recovering to rise above that level again. This has become the current reality of the price of the flagship crypto token, which has continued to decline since then Spot Bitcoin ETFs were approved. This is surprising considering that these funds were projected to help boost the price of Bitcoin at launch.
Why the price of Bitcoin could fall
Bloomberg analyst James Seyffart provided insight into what could be the reason for Bitcoin’s falling price, as he revealed That GBTC in grayscale has experienced $2.2 billion in outflows since converting to a Spot Bitcoin ETF. Crypto analysis platform Arkham Intelligence too revealed that Grayscale had moved 9000 BTC from their wallet to Coinbase, indicating an impending sale.
A selling pressure of such magnitude would undoubtedly impact Bitcoin’s price, and that seems to be a plausible explanation for why Bitcoin’s price has fallen lately. Jan3 CEO and Bitcoiner Samson Mow also echoed similar sentiments as him named that GBTC selling pressure pushed prices down.
However, Mow believes this trend “will not be a long-term process,” as he predicts that many GBTC investors will not be able to get rid of their shares because the “tax burden is too high.” However, JP Morgan will beg to differ as one research report The bank estimates that up to $3 billion could disappear from the GBTC fund as many investors look for profits.
Crypto analyst Ash Crypto too recently elaborated about how profit taking is one of the reasons GBTC is seeing these significant outflows. He explained that many GBTC investors bought shares in the fund when it was trading at a price 40% discount on Bitcoinand now they are exiting their positions as that discount is now 0%.
BTC bulls make a play for control | Source: BTCUSD on Tradingview.com
Spot Bitcoin ETFs live up to the hype
While Grayscale’s GBTC continues to bleed, other Spot ETFs appear to be living up to the hype, with impressive demand for these funds. Nate Geracithe president of the ETF store, revealed those two (IBIT and FBTC) of the nine Spot ETFs (excluding GBTC). hit $1 billion in assets under management (AUM) just after five trading days.
Specifically, BlackRock’s IBIT (iShares Bitcoin Trust) was the first to do this achieve this milestone in just four trading days. Commenting on how impressive this was, Bloomberg analyst Eric Balchunas noted that only two other ETFs ($GLD and $BITO) had done this before, and none of these funds faced as much competition as IBIT on launch day.
The demand for Spot ETFs is clearly there, as two spot Bitcoin ETFs have already achieved a record previously only achieved by two other ETFs.
Featured image from Yahoo Finance, chart from Tradingview.com
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