Bitcoin’s Rollercoaster Ride in 2024
The year 2024 has proven to be a rollercoaster for Bitcoin investors, marked by a historic development as the U.S. Securities and Exchange Commission (SEC) granted approval for 10 spot Bitcoin ETFs to trade in U.S. marketplaces.
In response to this groundbreaking decision, Bitcoin (BTC) prices surged to a new multi-year high, reaching an impressive $49,102. However, the market’s enthusiasm was short-lived as BTC experienced an 18% decline over the weekend, plummeting to fresh year-to-date lows of $40,236.
Debunking the Grayscale Narrative
Amidst the market tumult, Julio Moreno, Head of Research at CryptoQuant, dispels the widely circulated narrative attributing the Bitcoin price drop to Grayscale’s GBTC selling Bitcoin. Before its conversion to an ETF from a trust, the Grayscale Bitcoin Trust (GBTC) was a primary avenue for U.S. stock traders to gain exposure to Bitcoin price movements without directly purchasing the cryptocurrency.
While GBTC witnessed significant outflows post its uplisting to an ETF, Moreno reveals that a considerable portion of these outflows stemmed from investors transitioning to lower-fee ETFs. Contrary to the popular belief of GBTC causing the downturn, Moreno points out that other Bitcoin ETFs collectively net purchased approximately 72,000 Bitcoins, effectively offsetting the 60,000 Bitcoins sold by Grayscale’s GBTC.
On-Chain Data and Derivatives Impact
On-chain analytics firm Glassnode sheds light on the factors driving Bitcoin’s price volatility, suggesting a confluence of derivatives leverage and spot profit-taking. Notably, both futures and options markets have experienced a substantial increase in open interest (OI) since mid-October, according to Glassnode.
Despite other underlying factors contributing to the interim volatility, the surge in open interest in both markets indicates a rise in leverage, asserting itself as a more dominant force in the Bitcoin markets. While Bitcoin was up 0.58% in the last 24 hours at the time of writing, trading at $41,543 according to CoinMarketCap data, the market continues to grapple with the aftermath of the SEC‘s ETF approval, with investors recalibrating their strategies in response to this seismic shift.
