Article Rewrite:
The market’s downturn continues in the post-ETF era.
From last night to this morning, the market continued its downward trend. According to the OKX market data from Eu Yi, BTC has fallen below 40,000 USDT, currently at 39,701.1 USDT, with a 24-hour decline of 4.4%. ETH is approaching 2,300 USDT, reaching a low of 2,302.01 USDT, with a 24-hour decline of 5.4%.
In addition to BTC and ETH, some altcoins that were previously performing strongly have also experienced significant pullbacks. As of now, SOL is currently at 86.64 USDT, with a 24-hour decline of 7%; ARB is at 1.69 USDT, with a 24-hour decline of 6.8%; OP is at 3 USDT, with a 24-hour decline of 4.2%; TIA is at 15.24 USDT, with a 24-hour decline of 9.1%.
Due to the overall downturn in the market, the total market value of cryptocurrencies has also significantly decreased. CoinGecko data shows that the current total market value of cryptocurrencies has decreased to $1.63 trillion, a decrease of 4.3% in the past 24 hours. The enthusiasm of cryptocurrency users for trading has also noticeably declined, with today’s panic and greed index reaching 70, downgrading from the long-standing “greed” to “neutral” level.
In terms of derivative trading, Coinglass data shows that there have been liquidations worth $252 million in the past 24 hours, with the majority being long liquidations amounting to $217 million. In terms of specific cryptocurrencies, BTC liquidations amounted to $74.65 million, and ETH liquidations amounted to $64.87 million.
Reasons for the downturn: Good news exhausted? Profit-taking? Grayscale selling pressure?
Since the approval of the Bitcoin spot ETF on January 10th, the market has been in a continuous downtrend. Calculating from the peak price of BTC after that date (high point 48,988, low point 39,757), the overall decline has reached nearly 20%.
There are various opinions from institutions and analysts about the reasons for the market’s decline.
Some believe that this is a foreseeable correction after the positive impact of the ETF has diminished. Chris Burniske, former head of cryptocurrency at Ark Invest and current partner at Placeholder VC, predicted on the day of the ETF approval: “The current situation easily reminds people of the hype surrounding Coinbase’s IPO, where many people raised their expectations for the market. However, in hindsight, that was the highest point for BTC for several quarters.”
Analysts at bitBank also hold the same view. The institution also predicted in an email to clients that the approval of the ETF could become a short-term top for BTC prices.
Market data from large traders also supports this prediction. Kaiko data shows that after the ETF approval, the selling pressure in the market has mainly focused on Binance, OKX, and Upbit, indicating that the main reason for the price decline seems to be large long-position traders taking profits in response to this round of ETF market trends.
Kaiko’s tracked data shows that Binance’s spot market CVD turned positive last Thursday and has been declining since then, equivalent to a capital outflow of nearly 5,000 BTC. Upbit in South Korea had the second highest net capital outflow, followed by Itbit and OKX.
Focusing on more tangible news, the most attention-grabbing factor for the recent decline is Grayscale’s continuous selling behavior.
Odaily Star Daily Note: For details, please refer to the article “Did BTC’s decline after the approval of the ETF happen due to Grayscale’s selling pressure? How much selling pressure is still to come?”
GBTC’s change in positioning has opened up a channel for early investors to redeem in reverse. According to an analysis report compiled by Kiarash Hossainpour, co-founder of Colorways Ventures and The Consensus, since the approval of the Bitcoin spot ETF, the amount of BTC held by GBTC has decreased from 621,000 to slightly below 580,000, with an outflow of more than 40,000 BTC, equivalent to approximately $1.6 billion at the current price.
In addition, according to insiders, FTX seems to be the main source of the recent GBTC selling pressure, as the institution has sold 22 million GBTC shares worth nearly $1 billion.
What is the future direction? Is there hope for a rebound?
Judging from the various predictions about the future market trend, it seems that many analysts are not optimistic about the short-term outlook.
Kiarash added in his report that there is still selling pressure of 281,045 BTC in GBTC, worth about $12 billion.
Nikolaos Panigirtzoglou’s team of analysts at JPMorgan also pointed out that if GBTC investors continue to take profits, Bitcoin prices may face further downward pressure in the coming weeks. However, Nikolaos is slightly more optimistic than Kiarash, believing that the total outflow value of GBTC will eventually be around $3 billion.
Arthur Hayes, co-founder of BitMEX, whose recent market predictions have been accurate, also expressed a pessimistic view on the future price trend of Bitcoin. He believes that Bitcoin will soon fall below the $40,000 mark (which has been proven today). As a result, Arthur has purchased put options with a strike price of $35,000 expiring on March 29th.
Arthur also emphasized that the decline in Bitcoin prices may continue until the release of the US Treasury Department’s quarterly refinancing announcement on January 31st.
However, while collectively bearish on the short-term market trend, many analysts have a positive outlook on the longer-term market trend.
Insiders from FTX stated that they have cleared their holdings of GBTC shares. As this institution has been a major force in the GBTC sell-off so far, it is expected that the selling pressure in the market may lighten in the coming period.
Michael Novogratz, CEO of Galaxy Digital, stated that the price of Bitcoin may “rise within six months.” Michael explained that only 30% of the funds flowing out of GBTC have shifted to other ETFs, and as this proportion increases, the current market’s anxiety will gradually fade, thereby pushing Bitcoin to higher prices within six months.
Matt Hougan, CIO of Bitwise, succinctly summarized the current market situation: “People overestimated the short-term effect of the Bitcoin spot ETF but underestimated the long-term impact of the ETF.”
In summary, you may be disappointed with the market trends after the approval of the ETF, but considering the change in market sentiment, this script is not too surprising. The approval of the ETF is indeed positive news, but the buying effect will not be instantly apparent and will require time to accumulate gradually.
In the past week, even with the disruption caused by GBTC, we have seen an overall net inflow in the ETF market. While one is coming to an end, the other is just beginning. As this exchange continues, the market sentiment will eventually undergo a transformation.
