Bitcoin faced increased selling pressure following the long-awaited U.S. approval of spot-bitcoin exchange-traded funds (ETFs), triggering a ‘sell-the-news’ reaction in the world’s most prominent cryptocurrency.
The unexpected steep decline on Friday, just a day after major players like BlackRock Inc (NYSE: BLK), Grayscale, and Cathie Wood’s Ark Invest received approval to list bitcoin-tracking ETFs on the stock market, was followed by a stagnant performance on Saturday and a further 2.6% drop on Sunday for the BTC/USD pair.
The lacklustre response to the post-ETF launch of Bitcoin is attributed to the significant anticipation and hype surrounding ETFs in the market over the past six months, leading to widespread profit-taking and exacerbating the losses.
This pattern reflects a familiar trend in the crypto markets where prices often surge in anticipation of major events, only to fall short afterwards.
A similar situation occurred when Ethereum underwent its significant Merge to proof-of-stake consensus in September 2022. Despite high expectations for this major network update, Ethereum’s native token, ether (ETH), saw a 25% decrease in value in the subsequent two months.
Despite Bitcoin’s short-term underperformance, the market sentiment remains optimistic about its future prospects.
Early indicators show a strong interest in the newly launched bitcoin ETF products.
Grayscale’s GBTC, the world’s largest bitcoin fund, experienced remarkable trading activity on its first day on the NYSE Arca, becoming the most actively traded Bitcoin ETF with a trading value of $2.32 billion.
It also stood out as the most traded commodity ETF in the US markets and ranked as the 9th most traded ETF in the entire US marketplace.
A key feature of GBTC’s trading was its high liquidity, evidenced by a narrow six-basis-point average bid-ask spread throughout the day, as per Grayscale’s internal data.
The continued interest in GBTC and other ETFs is expected to provide ongoing buying support for Bitcoin, given it is the primary asset underlying these funds.
At the time of this writing, the BTC/USD pair was trading at $42,236.27, having dropped below the 50-day moving average for the first time in three months.
