The price of Bitcoin (BTC) has suffered a major drop in the last few days. This week, the first-ever Bitcoin Exchange Traded Funds (ETFs) were approved and launched. How can it be that this historic milestone led to a sharp drop in prices?
The approval of Bitcoin ETFs was met with strong criticism from several quarters
Bitcoin is trading with a downward price movement
The market has been anticipating the launch of Bitcoin ETFs for months. In the run-up to January 10th, the last day the American Securities and Exchange Commission (SEC) had to decide at least on the joint application from ARK Invest and 21Shares, the Bitcoin price has developed impressively.
The decision was finally made on Wednesday evening: no fewer than eleven applications received the green light from the supervisor. Later in the evening, Bitcoin rose to a high of just under $48,000, but soon plummeted to below $45,000.
A day later, when all ETFs officially went public, Bitcoin rose to a new high of around $49,000, but investors again had little time to celebrate. Initially the price fell back to around $46,000, but yesterday a further decline led to an all-time low of around $41,400.
Reason for BTC price drop
Anthony Scaramucci, founder and CEO of hedge fund SkyBridge Capital, told Bloomberg that he believes the decline was partly due to selling pressure from GBTC, which was previously a regular trust fund.
GBTC, or in full “Grayscale Bitcoin Trust,” converted into a spot ETF this week and saw large outflows.
Also Ran Neuner from CNBC Points on the big sale of GBTC stocks as the cause of the Bitcoin decline:
“GBTC held over $25 billion worth of Bitcoins that were locked and unable to be sold for years. Once the redemption option became available, people start leaving for the first time – upon departure the Bitcoin must be sold on the market.”
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