Bitcoin has experienced a notable decline, plummeting by more than one-fifth since reaching its peak earlier this month. The decline was triggered by the approval of the United States’ first spot Bitcoin exchange-traded fund (ETF), leading investors who had initially purchased in anticipation of approval to sell off their holdings following the confirmation.
As of the latest update, the world’s largest cryptocurrency is valued at $38,900, marking a substantial 20.6% drop from its recent three-year high of around $49,000, achieved on January 11. This surge had followed the decision by the U.S. Securities and Exchange Commission (SEC) to greenlight spot Bitcoin ETFs.
Analysts at Deutsche Bank reported a significant influx of nearly $4 billion into the newly introduced spot Bitcoin ETFs, with notable contributions to products operated by financial giants BlackRock (NYSE: BLK) and Fidelity. However, it was highlighted that $2.8 billion of these funds were redirected from Grayscale, once a fund and now transformed into an ETF, which had previously dominated the regulated Bitcoin investment market.
An additional factor contributing to Bitcoin’s recent price decline was the liquidation of assets from the bankrupt crypto exchange FTX, as outlined by Deutsche Bank.
In a separate development, shares in Coinbase (NASDAQ: COIN), the leading U.S. cryptocurrency exchange, saw a dip of approximately 4% in pre-market trading on Tuesday. This decline followed JPMorgan’s decision to downgrade the stock from neutral to underweight, citing concerns that the catalyst provided by Bitcoin ETFs might fall short of market expectations, ultimately disappointing participants in the ecosystem.
The impact of Bitcoin’s downturn has reverberated across the broader crypto market, with other cryptocurrency-related stocks also facing notable pressure.
