The price of bitcoin (BTC) fell on Friday, erasing gains made during the days prior. The decline today comes alongside increased market volatility following the U.S. Securities and Exchange Commission’s approval of the in-demand spot BTC exchange-traded funds (ETFs).
Are traders selling the news after the hype?
Bitcoin Takes A 7% Nosedive
Bitcoin appeared set to retake the $49,000 level on Thursday, but the rally was turned back as BTC corrected.
The world’s largest cryptocurrency, with a market capitalization of $836 billion, is now changing hands at $42,653 a piece. The current trading price is 38.18% down from its all-time high of $69,044 registered in November 2021, according to data from CoinGecko.
Roughly $91 million worth of Bitcoin positions have been wiped from futures markets over the past 24 hours per CoinGlass, including $75 million in long positions and around $16 million worth of shorts.
The Bitcoin price correction confirms bears’ theory of a sell-the-news-style scenario happening after the greenlighting of spot Bitcoin exchange-traded funds on Jan.10.
After a decade of repeated denials, the Securities and Exchange Commission finally gave the blessing to just under a dozen spot Bitcoin ETFs — a landmark development that pundits believe signifies officially integrating Bitcoin into the global economy. These spot ETFs provide an easy way for traditional retail and institutional investors to gain direct exposure to the oldest and largest cryptocurrency without the hassle of dealing with crypto exchanges or wallets.
Spot ETFs Make A Splash
Wall Street goliath BlackRock reignited interest in Bitcoin in June 2023 during crypto winter, when it applied for SEC’s permission to launch its iShares Bitcoin Trust (IBIT) owing to customer demand for such a financial product. Shortly after, the SEC received over 13 other ETF applications, and BTC’s price was soaring.
The spot Bitcoin ETFs launched with a bang, with the newly issued products hauling in $4.6 billion in net assets on the first day.
Industry watchers now think the SEC’s acquiescence might have opened the door to the greenlighting of other crypto-based spot ETFs, like a spot ether ETF. Senior Bloomberg ETF analyst Eric Balchunas is 70% convinced that a spot ETH ETF will hit the market by May.