Crypto Jan 19, 2024 10:01 AM EST

Bitcoin Hits Lowest Point Since January Approval of ETFs

By April Fowell

  • Bitcoin experiences its lowest price since the recent approval of nearly a dozen exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC), dropping 4.3% to $40,809.

  • The decline, marking an 11% decrease since the SEC's approval on January 10, is attributed to diminishing hype around ETFs, leading traders to shift focus. Bartosz Lipiński, CEO of Cube.Exchange, suggests a psychological support level of around $40,000.

  • Inflows into Bitcoin ETFs show BlackRock's fund surpassing $1 billion in investor deposits since last Thursday, with Fidelity's FBTC Bitcoin ETF also witnessing significant single-day inflows of $358 million. Grayscale's Bitcoin Trust outflows contribute to this trend, as investors exit in anticipation of ETF gains.

Bitcoin has experienced a decline to its lowest price since the US Securities and Exchange Commission (SEC) approved nearly a dozen exchange-traded funds (ETFs) holding the cryptocurrency last week.

The largest cryptocurrency fell by as much as 4.3%, reaching $40,809, marking an 11% decrease following the SEC's approval on January 10. The recent slump is attributed to a waning hype around ETFs, prompting traders to shift their focus.

Bartosz Lipiński, CEO of Cube.Exchange, suggests that current options positioning indicates support around $40,000, a significant psychological price point for Bitcoin.

Bitcoin Hits Lowest Point Since January Approval of ETFs
(Photo : by Dan Kitwood/Getty Images)
Bitcoin has experienced a decline to its lowest price since the US Securities and Exchange Commission (SEC) approved nearly a dozen exchange-traded funds (ETFs) holding the cryptocurrency last week.

This has traders keeping a careful eye on the money coming into the ETFs. Since the funds began trading last Thursday, BlackRock Inc.'s fund has already surpassed $1 billion in inflows from investors, making it the first in the group to do so.

According to statistics collated by Bloomberg, investors pushed IBIT beyond the milestone on Wednesday by depositing $371 million into the BlackRock fund. Immediately behind is Fidelity Investments. $358 million was invested in the company's FBTC Bitcoin ETF yesterday, marking the largest single-day total since the fund's inception one week ago.

Approximately $880 million has been deposited into Fidelity's fund overall. Early asset consolidation has been spearheaded by BlackRock and Fidelity, who have received 68% of all inflows among the nine new ETFs available on the market, or close to $2 billion.

Read Also: Bitcoin Breaks into Big Leagues, Sparking Investor Excitement and Fear

Investors Exiting Grayscale's GBTC Fund Contribute to Bitcoin ETF Inflows

A substantial portion of recent inflows into Bitcoin exchange-traded funds (ETFs) is attributed to investors departing from Grayscale Investment's GBTC fund, as reported by Bloomberg Intelligence.

Grayscale's Bitcoin Trust, with over $28 billion in assets under management when it transitioned to an ETF, has witnessed approximately $1.6 billion in outflows since its commencement of trading.

Michael Safai, Founding Partner at quantitative trading firm Dexterity Capital, noted the impact of the GBTC situation, stating that some investors waited for the Grayscale discount to diminish before exiting their positions, and with the discount now nearly gone, some have sold and may re-enter ETFs soon.

A management charge of 1.5% is industry-high for Grayscale's Bitcoin ETF. Though they are not as expensive as GBTC, BlackRock and Fidelity's management costs are not the lowest among the new Bitcoin ETFs; Franklin Templeton has that distinction with its 0.19% management charge. Less than 2% of inflows have gone into Franklin despite its industry-low cost compared to the larger Bitcoin ETF group.

Companies that are publicly listed and involved in the digital asset market continued to decline. The biggest US cryptocurrency exchange, Coinbase, dropped around 6.7% and has decreased by 17% since the approvals. Marathon Digital, a bitcoin miner, fell 6.9%, while MicroStrategy, a bitcoin proxy, was down 3%.

Related Article: Bitcoin ETFs Threaten Coinbase Market Share Despite Company's Record 2023 Performance


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