Jan 19, 2023

Bitcoin has dropped over 15% to around $41,300 since the first U.S. spot BTC ETFs listed last week, with $1.5 billion flowing out of the Grayscale Bitcoin Trust (GBTC), according to JPMorgan. “It looks like GBTC investors who over the past year had been buying the GBTC fund at a significant discount to NAV to position for its eventual ETF conversion, have been taking full profit post-ETF conversion by exiting the bitcoin space entirely rather than shifting to cheaper spot bitcoin ETFs,” analysts wrote. JPMorgan previously estimated that up to $3 billion had been invested in GBTC in the secondary market during 2023 to exploit the trust’s discount to NAV. If this estimate is correct,  there could be an additional $1.5 billion to exit the space via profit-taking on GBTC, which will put further pressure on bitcoin prices in the coming weeks.

(Shutterstockl)

Ether could be poised to soar in 2024 on the back of hopes of a spot ETH ETF listing, analysts at Coinbase have said. ETH reached its highest price since May 2022 following the approval of bitcoin ETFs in the U.S. last week. Several of the firms behind BTC ETFs, such as BlackRock and VanEck, are plotting similar products for ETH, Coinbase said in a weekly newsletter. Aside from ETF hopes, Ethereum's upcoming Dencun upgrade, which aims to improve the mainnet's scalability, could galvanize investor interest in ETH. Institutional crypto firm ETC Group said in its annual report that ether has a bullish outlook given Ethereum's ongoing status as the most dominant blockchain for DeFi and the extra returns users can accrue through staking their coins. 

ARK Invest sold a further $15 million worth of shares in the ProShares Bitcoin Strategy ETF (BITO) on Wednesday, adding to the $15.8 million worth it sold the day before. ARK essentially swapped the BITO shares for $15 million worth of its own spot bitcoin ETF (ARKB). ProShare's bitcoin product was the first ETF tied to the BTC futures market to list in the U.S. back in October 2021. ARK sold off its shares in Grayscale Bitcoin Trust late last year in favor of BITO, anticipating the approval of spot bitcoin ETFs in the U.S. Now the approval has happened, ARK is pivoting toward its own product. 

Futures traders betting on higher crypto prices saw some $217 million in liquidations in the past 24 hours as the approval of spot bitcoin ETFs continues to be a “sell-the-news” event, a contrarian bet that shows no signs of slowing.

Fears of crypto fund Grayscale selling its bitcoin holdings, as part of its holders selling GBTC ETF shares, contributed to a drop in prices. Verified wallets belonging to Grayscale, tracked and labeled by analysis firm Arkham, show that the fund moved over $400 million worth of bitcoin to custodian Coinbase Prime on Thursday.

Bitcoin fell below $42,000 on Thursday, causing $88 million worth of the $217 million in liquidations across the crypto market. 

“BTC is hovering above the $40,000–$42,000 zone, which is likely to act as short-term support,” said Rachel Lin, CEO and co-founder of Singapore-based SynFutures, in an email. “Overall, the past week can be summed up as the calm after the storm. The ETF mania phase is over, and the market is moving sideways, looking for the next trigger.”

- Omkar Godbole

We may earn a commission from partner links. Commissions do not affect our journalists’ opinions or evaluations. For more, see our Ethics Policy.