Emmanuel Ochayi
Bitcoin has experienced a setback, witnessing a $10,000 drop from its January peak and slipping below the $40,000 mark.
It witnessed a downturn this January, casting a shadow over the optimism that surrounded the recent approval of Bitcoin Spot ETFs in the United States. The much-anticipated launch of these exchange-traded funds was expected to bring a wave of positive momentum for Bitcoin, but the reality has been starkly different.
“Bitcoin’s recent performance is not aligned with the expectations we had post-ETF approval. It’s been a tough month for the crypto market,” says financial analyst Jane Thompson.
READ ALSO: Bitcoin Rises To $45,000 Since April 2022 Amid High Hopes For Spot Bitcoin ETF Approval
Despite the approval of eleven spot Bitcoin ETFs by the US Securities and Exchange Commission (SEC) two weeks ago, Bitcoin has experienced its longest losing streak since mid-December, falling for three consecutive days.
Other major cryptocurrencies, including Ethereum and Solana, have also dipped amidst tougher macroeconomic conditions characterized by rising interest rates and a strengthening US dollar.
The initial enthusiasm following the ETF approval pushed Bitcoin above $49,000, a level not seen since 2022. However, the excitement was short-lived, and Bitcoin is now trading around $39,000, marking its lowest point this month and a $10,000 drop from its January high.
In the last 24 hours, the crypto market witnessed 126,807 liquidations totaling $332.83 million, with the largest single liquidation on Bybit valued at $5 million.
Adding to the downward pressure, investors have sold over $2 billion worth of the Grayscale Bitcoin Trust (GBTC) since its conversion into an exchange-traded fund earlier this month. The negative sentiment is further evident in the mass unwinding of bullish perpetual futures, resulting in sub-zero funding rates, indicating a situation where perpetuals trade at a discount to the underlying asset’s price.
“Bitcoin’s current struggles raise questions about the anticipated widespread adoption following the ETF approval. It seems the market is grappling with various factors impacting its trajectory,” comments crypto expert Mark Johnson.
The setback comes as traditional financial firms, with exposure to Bitcoin ETFs, cut fees in a bid to attract inflows. Invesco and WisdomTree have reduced fees by more than 60 percent on European Bitcoin products amidst the influx of new exchange-traded funds available to US investors.
While the approval of spot Bitcoin ETFs from BlackRock, Fidelity, and Invesco was expected to usher in a new era for Bitcoin adoption, the market now faces the challenge of finding a balance between supply and demand. The coming expansion of prices appears to be lower than existing products in other markets, indicating a need for reassessment in the evolving landscape of cryptocurrency investments.
