Arguably the most anticipated development in the cryptocurrency industry over the past decade became reality earlier this week when the US Securities and Exchange Commission greenlighted numerous spot Bitcoin ETFs.
11 such products reached the markets on Thursday, and the volumes exceeded $4 billion on the first trading day. Amid this, BTC faced mindblowing volatility that included a price dump from over $49,000 to under $42,000.
Was it Bound to Happen?
Bitcoin skyrocketed to over $49,000 for the first time in nearly two years on Thursday, just hours after the ETFs went live on the US markets. Hours later, the asset fell by three grand. On Friday, the landscape worsened as the cryptocurrency plummeted to $41,500. This meant that the asset lost more than $7,000 in just over a day.
Ahead of the ETF approvals, many experts speculated on whether BTC’s price had been priced in, given the fact that it shot up by more than 150% in 2023. The sell-the-news camp was quite active, with numerous predictions that the cryptocurrency would fall after the ETFs reached the markets.
So far, they seem to have a point. In fact, history shows that something similar happened in August 2023. Europe’s first spot Bitcoin ETF launched on Euronext Amsterdam, and BTC’s price slumped by $1,500 within the first few days.
Back in late 2021, the SEC greenlighted several futures Bitcoin ETFs, and the effects were similar, with a massive price decline in the following weeks and months.
Grayscale Behind This?
After the ETFs launched on Thursday, the volumes shot up to over $4 billion, with Grayscale’s one taking the main stage with the most substantial numbers. However, this could actually be the reason behind the price falls, which is what SkyBridge Capital’s founder, Anthony Scaramucci, suggested.
“There seems to be a lot of selling of Grayscale,” he said, which could be somewhat understandable, given Grayscale’s higher-than-average fees of 1.5%. Just for reference, most ETF competitors offer somewhere between 0.25% and 0.4%.
Grayscale’s GBTC Trust saw the light of day over a decade ago and had become the largest Bitcoin fund with an AUM of over $28 billion. It was converted into a spot Bitcoin ETF, alongside the other approvals, and actually registered the largest opening day turnover with volumes of $2.3 billion.
“The second thing we are seeing is the bankruptcy estate of FTX is unloading into the ETF announcement. There is a heavy volume of selling in Bitcoin right now. I do expect the supply overhang to be done in the next six to eight trading days,” – Scaramucci concluded.