As buyers tried to figure out what would happen after all the money came into the cryptocurrency market, there was a big drop in the value of cryptocurrencies on Tuesday. After the US Securities and Exchange Commission (SEC) approved the first spot Bitcoin (CRYPTO: BTC) exchange-traded funds (ETFs) on January 10, 2024, this change in people’s views happened about two weeks later.
During today’s regular trading session, the prices of Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) all dropped. Bitcoin’s price dropped 2.2%, Ethereum’s price dropped 6.4%, and Google’s price dropped 5.9%.
The world of cryptocurrencies has changed a lot over the years. These ups and downs show how regulatory decisions continue to affect market trends. At this point, buyers are figuring out how to respond to these changes, and the market is still responding to how digital assets are changing.
There is less excitement about spot Bitcoin ETFs now
Bitcoin’s price has dropped by about twenty percent since it hit a high point of about forty-nine thousand dollars after the ETF was approved. On January 11, 2019, a three-year high was hit. That same day, the Securities and Exchange Commission (SEC) approved eleven competing spot Bitcoin exchange-traded funds (ETFs). This drop comes after the original excitement that surrounded the approvals.
Bitcoin’s value has dropped recently, but it has still grown by an amazing 70% in the past year. A big chunk of this gain came during a rise that started in October 2023 and went on for many months. The Securities and Exchange Commission (SEC) decided not to review a federal court decision in August. Because of this choice, Grayscale Investments couldn’t turn its widely used Grayscale Bitcoin Trust into an exchange-traded fund (ETF).
Many investors see the acceptance of spot Bitcoin exchange-traded funds (ETFs) as a big turning point for the cryptocurrency business. Setting up different cryptocurrency accounts or wallets with a cryptocurrency-focused broker can be time-consuming and difficult. Exchange-traded funds (ETFs) make it easier for investors to put money into cryptocurrency assets. During the normal trading day, almost any broker can help you buy and sell shares of exchange-traded funds (ETFs). This is similar to how easy it is for private investors to trade publicly traded securities.
Many people who do cryptocurrency business think that the approval of the first Bitcoin exchange-traded funds (ETFs) will not only prove that crypto assets are a good investment, but could also bring huge profits to ETF providers as people invest in Bitcoin and other cryptocurrencies. CryptoQuant’s research shows that the money coming in from spot Bitcoin exchange-traded funds (ETFs) could eventually raise the value of all cryptocurrencies by more than $1T.
It’s not just a “sell the news” event
When it comes to investing in cryptocurrencies, there is a clear trend: some buyers are moving quickly to take advantage of the recent price rise. But I think this situation is more than just an attempt to “sell the news.”
A company called CoinShareswhich manages digital assets said that about $1.25 billion came into crypto funds in the first week after the first Bitcoin ETFs were released. Interestingly, this good trend changed last week, when $21 million left the account. This change happened because big institutional investors planned to cut their shares during the market rally.
The news from Eric Balchunas, senior ETF expert at Bloomberg Intelligence, makes things even more complicated. He pointed out that most of the money leaving the market is being taken out of Grayscale’s spot bitcoin ETF, which is worth more than $2.2 billion. Notably, the estate of the former cryptocurrency exchange FTX played a big part in these big sales. As part of its bankruptcy processes, FTX sold off about $1 billion worth of assets.
This news may make people look twice, but it could also be a good sign for people who like cryptocurrencies. The crypto market has a long way to go before it becomes widely accepted as a good way to trade. But the unusual sight of a bankrupt cryptocurrency exchange selling off a lot of its stocks after what was thought to be a turning point for the crypto asset class could be seen as a sign of hope.
Looking ahead, it wouldn’t be surprising if the tide turned around and outflows turned back into inflows after the recent spot Bitcoin ETF approvals. It looks like a short break in Bitcoin’s rise could lead to a comeback as more buyers carefully look into the possibilities in the crypto world.
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