Bitcoin has fallen over one fifth since its peak earlier this month, hit after the United States approved its first spot bitcoin exchange traded fund (ETF), as investors who had bought in expectation of the approval sold after the confirmation.
The world’s largest crypto currency was last at $38,900, down 20.6% from around $49,000 – the three-year high it hit on Jan. 11 in the wake of the decision by the U.S. Securities and Exchange Commission.
The recent losses have unwound part of a huge rally late last year, which came amid fevered speculation that the launch of mainstream stock market funds tracking the world’s leading crypto token would draw in new investors to bitcoin.
But the flows into the ETFs — many launched by big Wall Street players such as BlackRock — have underwhelmed and investors who bought them have been left with hefty losses.
The 10 new funds launched on January 11 2024, after they were approved by the US Securities and Exchange Commission, had collectively pulled in $4.7bn by the end of Tuesday, according to crypto investment group CoinShares. Bitcoin traded at $46,100 on the day the ETFs were launched, but has fallen steadily since.
Nearly $4 billion of funds have flowed into the new spot bitcoin ETFs, particularly to products operated by BlackRock and Fidelity, according to analysts at Deutsche Bank.
But, they said, $2.8 billion of those were accounted for by flows out of Grayscale – once a fund, now an ETF – which had previously dominated the regulated bitcoin investing market.
A further factor in bitcoin’s price decline was reportedly from the sale of assets from bankrupt crypto exchange FTX.
A good example of perhaps “buy the rumour and sell the fact”.
(Source: Reuters / FT)