Bitcoin Dips Over 15% After Market Reacts to Launch of ETFs

The price of Bitcoin has decreased by over 15% since the launch of exchange-traded funds (ETFs) last week, with a flow of $1.5 billion from the Grayscale Bitcoin Trust, according to a research report published by JPMorgan before the end of the week.

It should be noted that after the launch of the first exchange-traded fund, the price of Bitcoin reached its highest levels since August 2022 on January 4th. However, it then corrected its course and dropped to its lowest level since mid-December 2023, following the market’s reaction to the approval of exchange-traded funds.

The experts, led by Nikolaus Panigirtzoglou, wrote in the report: “It seems that the investors in GBTC who enjoyed a significant discount on the net asset value over the past year are now directing themselves towards converting it into an ETF in the future.

They chose to cash in their full profits after converting to an ETF by completely exiting the Bitcoin space instead of immediately transitioning to lower-cost Bitcoin exchange-traded funds.”

Before being included in an Exchange Traded Fund (ETF) from a credit fund, GBTC was one of the few ways for stock traders in the United States to track the price movements of Bitcoin without the need to purchase the actual cryptocurrency.

This made it the largest regulated Bitcoin fund in the world in terms of asset management.

Beforehand, the bank had estimated that up to 3 billion dollars had been invested in GBTC in the secondary market during the year 2023 to take advantage of the fund’s discount on net asset value.

The report states that these external flows also put pressure on GBTC to reduce its fees, adding that “GBTC’s fees of 1.5% still appear to be excessively high compared to other instant Bitcoin exchange-traded funds that risk more external flows.”

The report cautioned that “more capital, potentially ranging from $5 billion to $10 billion, could be withdrawn from GBTC if it loses its liquidity advantage.”

الأداء اليومي

In a related context, and regarding daily performance, the currencies Bitcoin and Ether rose on Friday, January 19, along with the stock market, after the S&P 500 index reached an all-time high.

The price of Bitcoin increased by 2%, reaching $41,763.87, after it dropped to the major support level of $40,000 on Thursday.

Ether also rose by 2% and was traded at $2491.82.

Bitcoin is still on track to record a loss of 4% for the week, while Ether is also set to finish the week with a decrease of 3%.