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Bitcoin Sinks as ETF Narrative Falters

Hate to say we told you so... but there is no moonshot following the wave of spot Bitcoin ETF approvals.

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The price of Bitcoin is now at it's lowest in almost two months, with the price of BTC dipping under $40,000 in the past 24 hours, currently sitting just a touch above this level, even as conventional equities continue hitting new all time highs.

In the past 24 hours, 77,322 traders were liquidated, with the total liquidations at $210.98 million. The largest single liquidation order of $5 million happened on Bybit, according to Coinglass data.

The price of Ethereum also saw a decline of 3.26% to reach $2,328.3. The global crypto market cap is $1.58 trillion, a 2.52% decrease since yesterday, according to CoinMarketCap.

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Stocks, on the other hand, are experiencing a historic bull run. A heated discussion on the direction of monetary policy is being ignored by traders who have driven the S&P 500 to all-time highs. The index achieved a second weekly increase, lifting it to a new high, following a shaky start to the year. The Nasdaq 100 set a record and gained about 3% for the week, powered by tech firms.

For the first time in the previous two years, the S&P 500 gauge reached a record thanks to another surge in technology, the index's most significant sector.

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Prices correcting

The spot Bitcoin ETF narrative, which was riding on an expected influx of institutional investment, has helped push the price of bitcoin from $16,000 in mid-2023, to over $49,000 after they were approved by the US Securities and Exchange Commission earlier this month. Since then, it's price has dropped by almost 20%.

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"Overall VRP (volatility risk premium) has risen, and the Skew curve is skewed towards put options," Singapore-based options trading platform Greekslive said in a weekly trading update, noting that this "reflects the existence of a certain number of short-term panic orders in the market, the market bearish force has increased, but on the whole the long and short are relatively balanced, and it is still a fierce game."

According to Bloomberg, citing Coinshares data, crypto investment products saw $21 million in outflows, while Grayscale's spot exchange-traded fund GBTC saw $2.2 billion in withdrawals over the past week. A large portion of the outflows came from the FTX estate selling 22 million GBTC shares worth nearly $1 billion, which brought FTX estate’s GBTC holdings down to 0, Coindesk reported, citing industry sources.

The Fear & Greed Index for the world's largest cryptocurrency is current "neutral" at 50, indicating cautious optimism and stable market sentiment. This is 5 points lower than yesterday, and its lowest level reached since mid-October 2023.

Downward pressure on Bitcoin is somewhat limited by several factors: the Bitcoin halving in April-May, which cuts the reward for mining new Bitcoin blocks in half, controling the supply of Bitcoin and ensure its scarcity over time; and institutional investment via spot Bitcoin ETFs. But there could be more pain on the cards before things turn around.

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