Bitcoin ETF Falls Short of Market Impact Hopes

 

Bitcoin has fallen almost 20% since the initial launch of the first BTC spot ETF on January 11th.

On January 23rd, Bitcoin prices tumbled below $40,000, hitting an intraday low of $39,494 during the Tuesday morning Asian trading session.

Despite the spike to $49,021 on the day ETFs went live – a level not seen in a while – Bitcoin traded as low as $39,990 as of 6:00 AM Tuesday in London. This marks an 18% drop from that intraday peak.

On January 11th, nine new Bitcoin funds started trading in the US. Simultaneously, the Grayscale Bitcoin Trust (GBTC) transitioned from a closed-ended structure to an ETF.

During the first six days, the group attracted a net inflow of $1.2 billion, as reported by a senior ETF Analyst at Bloomberg Intelligence.

• BlackRock’s iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund attracted the most influx.

• In contrast, $2.8 billion exited the Grayscale fund. Eric Balchunas from Bloomberg Intelligence noted that notable sellers included the estate of bankrupt crypto exchange FTX, which disposed of the majority of its shares in the Grayscale vehicle.

Hopes were obviously very high with the approval of the product by the SEC, with some analysts predicting an all-time high (ATH). However, with the coin dropping below $40,000, we are wondering whether this is an indication of a countereffect on performance.

BTC is currently trading at $39,706.

 

Source: TradingView

Bitcoin has been heavily challenged by tough macro conditions over the past two weeks, which manifested through rallying rates and a strengthening dollar.

The digital currency surged almost 160% last year, outperforming traditional assets like stocks. A good chunk of people had speculated that ETFs would catalyse wider adoption of the cryptocurrency by institutional and individual investors.

BTC has been experiencing a noticeable decline in its value since the beginning of 2024. More specifically, the token’s performance is lagging behind and not keeping pace with broader international financial markets.