(Bloomberg) — Bitcoin has fallen nearly 20% since the Jan. 11 launch of the first exchange-traded funds that invest directly in the token, as speculators become more cautious about the potential impact of the products.
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The digital asset rose to $49,021 on the day ETFs from issuers including BlackRock Inc. were launched. and Fidelity Investments. Bitcoin was trading at $39,990 as of 6:03 a.m. Tuesday in London, an 18% decline from that intraday peak.
Nine new US spot bitcoin funds began trading on January 11, while the $22 billion Grayscale Bitcoin Trust – or GBTC – was converted from a closed-end structure to an ETF. A net $1.2 billion flowed into the group in the first six days, Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, wrote on X.
BlackRock's iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund received most of the inflow, while $2.8 billion exited Grayscale's fund, Balchunas said. Among the sellers was the holding of bankrupt cryptocurrency exchange FTX, which disposed of a majority of its shares in the Grayscale vehicle.
“Over the past two weeks, Bitcoin has been challenged by tighter macro conditions – evidenced by rising prices and a stronger dollar – and significant selling pressure from traders unwinding their GBTC arbitrage positions combined with the unloading of real estate assets for the FTX bankruptcy,” Sean Farrell said. , head of digital asset strategy at Fundstrat Global Advisors LLC, wrote in a note.
Farrell added that FTX's disposals will likely remove excess supply, suggesting that “heavy selling pressure from GBTC may subside soon.”
Bitcoin has risen nearly 160% in the past year, outperforming traditional assets such as stocks, amid speculation that ETFs will spur wider adoption of the cryptocurrency by institutional and retail investors. The token has been declining since the beginning of the year and is lagging global markets.
Tokens such as Ether and BNB were little changed in Asia on Tuesday along with Bitcoin, the largest digital asset, which is about $30,000 below 2021's pandemic-era record of about $69,000.
“GBTC outflows have created a market dynamic that needs to normalize before we see real price discovery,” said Leah Wald, CEO of digital asset investment firm Valkyrie Investments.
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