KEY POINTS
- Bitcoin nosedived to $38,505 approching a new low since the approval of spot Bitcoin ETFs
- GBTC saw nearly $600M outflow on Tuesday
- At 2:22 a.m. Eastern Time on Wednesday, Bitcoin positioned itself in the positive territory with a trading price of $40,006.63
Bitcoin, the world's oldest crypto asset, experienced a notable decline as it traded at the $38,000 price level. This descent, which started at the onset of the week and persisted into the following day, aligned with the substantial BTC selloff by Grayscale Investments, totaling nearly $600 million in asset value.
The cryptocurrency market continued to wade in the sea of red as Bitcoin, the world's largest crypto asset, nosedived to $38,505, approaching a new low since the U.S. Securities and Exchange Commission (SEC) approved the 11 spot Bitcoin exchange-traded funds in the U.S.
This latest price slump reduced Bitcoin's market capitalization by around $40 billion, standing at $767 billion.
Institutional selloffs of the recently approved Bitcoin ETFs and low demand for the crypto assets are believed to be impacting the crypto market and weighing down Bitcoin's value.
The king of crypto's continued downhill trading coincided with the transfer of approximately 15,200 BTC from Grayscale Investment's Bitcoin ETF GBTC to Coinbase worth around $590 million on Tuesday.
The amount of Grayscale Bitcoin Trust (GBTC) on Tuesday is slightly less than the day prior with all other Bitcoin ETFs absorbing the massive outflow.
Tether and VanEck advisor Gabor Gurbacs commented that early approval of Bitcoin Exchange-Traded Funds (ETFs) could have significantly mitigated the intense selling pressure and crossflows witnessed in a single fund like GBTC.
"If Bitcoin ETFs were approved earlier (fairly!) then there wouldn't have been this much selling/crossflow from one fund: GBTC," Gabor said, before adding, "GBTC is an aberration that hurt many investors and traders over time. The truth is regulators enabled it by restricting competition for no good reason."
If Bitcoin ETFs were approved earlier (fairly!) then there wouldn’t have been this much selling/crossflow from one fund: GBTC.
— Gabor Gurbacs (@gaborgurbacs) January 23, 2024
GBTC is an aberration that hurt many investors and traders over time. The truth is regulators enabled it by restricting competition for no good reason.
"The strong outflow can be attributed mainly to two factors: firstly, GBTC customers were restricted from redeeming shares and could only sell them on the secondary market due to the product's structure, before the conversion," Matteo Greco, Research Analyst at the publicly listed digital asset and fintech investment business Fineqia International told International Business Times.
"This compelled many customers to hold their positions for years without an exit option unless they were willing to sell at a significant discount in the secondary market," he said.
"Secondly, the higher management fee set by Grayscale (1.5%) compared to most competitors (0.2%/0.3%) led some investors to withdraw their investment from Grayscale, either to cash in profits or reinvest in more cost-effective ETFs," the research analyst added.
At 2:22 a.m. Eastern Time on Wednesday, Bitcoin exhibited a gradual upward trajectory, positioning itself in the positive territory with a trading price of $40,006.63.
Notably, it boasted a 24-hour trading volume of $31,033,322,928.
Over the course of the past 24 hours, Bitcoin has witnessed a commendable 0.46% increase in its valuation, marking a noteworthy recovery.
However, when considering the broader context of the last seven days, it has experienced a 6.55% decrease in value.
Bitcoin's current circulating supply is recorded at 19,606,856 BTC, underpinning its significance within the cryptocurrency ecosystem.
Moreover, its market capitalization has reached an impressive $784,325,640,094, as per the latest data sourced from CoinMarketCap.
