The year 2024 has been nothing short of a rollercoaster ride for Bitcoin investors, marked by the approval of 10 spot Bitcoin ETF products by the SEC, setting the stage for what could be considered one of the most thrilling financial product launches in history.
In response to this regulatory milestone, Bitcoin (BTC) prices soared to a new multi-year pinnacle, reaching an impressive $49,102. However, the market experienced an abrupt 18% downturn over the weekend, plunging to fresh year-to-date lows of $40,236.
As with any significant financial event, discussions among Bitcoin holders are abound, with debates swirling around whether the market had already factored in these developments.
Julio Moreno, Head of Research at CryptoQuant, has challenged the prevailing narrative suggesting that the drop in Bitcoin prices was instigated by Grayscale’s GBTC selling Bitcoin. Moreno clarified that, while Grayscale Bitcoin Trust (GBTC) witnessed significant outflows following its transition to an ETF, a considerable portion of these outflows were attributable to investors migrating towards lower-fee ETFs.
Contrary to popular belief, Moreno pointed out that while GBTC sold approximately 60,000 Bitcoins, other Bitcoin ETFs collectively purchased around 72,000 Bitcoins, effectively offsetting the sales from Grayscale’s GBTC.
The volatility in Bitcoin’s price, according to Moreno, can be attributed to profit-taking by Bitcoin holders, specifically short-term traders and whales, capitalizing on gains from the previous year’s surge. He suggested that the approval of the ETF might have triggered a “sell-the-news” event.
On-chain analytics firm Glassnode delved into the on-chain data, revealing that Bitcoin’s price drop might be a result of a combination of derivatives leverage and spot profit-taking. Metrics in both the on-chain and derivatives domains indicate that a substantial portion of Bitcoin investors treated the ETF approval as a “sell-the-news” event.
Glassnode reported a meaningful uptick in open interest (OI) in both futures and options markets since mid-October, with OI remaining at multi-year highs. This suggests that leverage is on the rise, exerting an increasingly dominant influence on the markets.
At the time of reporting, BTC had experienced a 0.58% uptick in the last 24 hours, reaching $41,543, as per CoinMarketCap data. The cryptocurrency market continues to navigate the aftermath of the SEC‘s landmark approval, with volatility likely to persist as investors adjust their strategies in this rapidly evolving landscape.
