BTC dips below $42K despite initial market hype for spot Bitcoin ETF
Over the weekend, Bitcoin (BTC) dropped below $42,000, failing to break above $43,100. As of the latest data, BTC is trading at $41,870 on major exchanges, still above the crucial support level of $40,250.
However, there is mounting sell pressure as the Asian markets prepare to open. As of January 15, liquidations amounted to $23.68 million in 24 hours. This situation primarily impacted long positions, accounting for around 85 percent and summing up to $20.11 million.
Prominent exchanges Binance and OKX bore the brunt of the liquidations, with $7.51 million and $5.26 million, respectively.
At the same time, reports suggest that ETF issuers have bought 23,000 BTC, and taken advantage of the market dip. Among them, BlackRock reportedly has purchased 11,500 BTC. This number is substantial, given that only 900 BTC are created daily. BlackRock’s purchase accounts for about 13 days’ worth of Bitcoin production taken up by one entity.
Initial hype for spot Bitcoin ETF
This decline occurred after the approval and the launch of spot Bitcoin ETFs, initially leading to a surge in BTC’s price.
QCP Capital noted the subdued reaction and speculated that the market might have factored in the potential ETF approval in advance. The analyst also highlighted the increased volatility in options trading attributed to the ETF news, anticipating a return to normalcy after the approval.
While the SEC’s decision on Bitcoin ETFs is eagerly awaited, market analysts collectively suggest that its approval might not trigger a significant upward rally in BTC prices. Instead, it is expected to reshape the cryptocurrency market dynamics, influencing both spot and futures markets and potentially reducing the volatility and dominance of large-scale investors.
Concerns about potential outflows from Grayscale’s GBTC ETF converted to a spot Bitcoin ETF might contribute to the decline in the BTC price. SkyBridge Capital founder Anthony Scaramucci suggested that the drop in BTC’s price could be linked to the sale of shares from Grayscale’s GBTC fund.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information