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Bitcoin Slumps With All-Time-Low Since BTC SEC Approval

Significant inflows into the recently introduced spot Bitcoin ETFs have been substantially counteracted by outflows from GBTC and other worldwide Bitcoin-related ETPs. Credit: Tokenpost

Mon, 22 Jan 2024, 00:36 am UTC

On Thursday, the price of Bitcoin (BTC) experienced a 4.5% decrease, reaching its lowest point in a month at $40,800. This downturn was closely mirrored by the CoinDesk 20 Index, which monitors the world's most significant and liquid cryptocurrencies, registering a 4.6% decline over the past 24 hours.

Spot Bitcoin ETFs' Impact on Bitcoin Price and Holdings

Since the introduction of the newly approved spot Bitcoin ETFs on January 11, the price of Bitcoin, after a brief spike, has decreased by approximately 13%.

Recent data, updated yesterday, reveals that the newly established spot ETFs have accumulated over 68,000 Bitcoin in their inaugural week. In contrast, Grayscale's GBTC witnessed a reduction of around 40,000 Bitcoin, resulting in a net addition of about 28,000 Bitcoin to the collective holdings of Bitcoin ETFs.

According to Bloomberg, K33 Research Analyst Vetle Lunde provided insight, noting that numerous spot Bitcoin products were actively traded worldwide before securing U.S. regulatory approval. Lunde emphasized that globally, exchange-traded products (ETPs) currently hold more than 864,000 Bitcoin, providing context to the relatively modest addition from the U.S. vehicles thus far.

Lunde further highlighted the recent exits from GBTC, accompanied by significant outflows from Canadian and European ETPs in the past week. Investors seeking profits or opting for more cost-effective U.S. ETFs contributed to these notable withdrawals.

ProShares Bitcoin Strategy ETF and Its Impact on Market Dynamics

Another factor influencing the Bitcoin market is the ProShares Bitcoin Strategy ETF (BITO), boasting assets under management exceeding $2 billion.

According to Coin Desk, while this futures-based ETF doesn't hold Bitcoin directly, it commands a substantial 36% share of Bitcoin contract open interest at the CME Group's exchange, according to Lunde. Collectively, futures-based Bitcoin ETFs contribute to 48% of all Bitcoin open interest at CME, shaping the market landscape and influencing investor sentiment.

Photo: Kanchanara/Unsplash

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