Bitcoin Has Fallen About 20% Since Pioneering US Spot ETFs Began Trading

(Bloomberg) — Bitcoin has fallen nearly 20% since the launch of the first exchange-traded funds that invest directly in the token on Jan. 11, as speculators have grown more cautious about the products' potential impact.

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The digital asset rose to $49,021 on the day the ETFs from issuers including BlackRock Inc. and Fidelity Investments went live. Bitcoin was trading at $39,990 as of 6:03 a.m. in London on Tuesday, down 18% from that intraday peak.

Nine new US spot Bitcoin funds began trading on January 11, while the $22 billion Grayscale Bitcoin Trust – or GBTC – converted from a closed-end structure to an ETF. A net $1.2 billion flowed into the group in the first six days, Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, wrote on X.

BlackRock's iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund collected most of the inflow, while $2.8 billion flowed out of the Grayscale fund, Balchunas said. The sellers also included the estate of the insolvent crypto exchange FTX, which sold the majority of its shares in the Grayscale vehicle.

“Over the past two weeks, Bitcoin has been challenged by tougher macroeconomic conditions – visible through rising interest rates and a stronger dollar – and significant selling pressure from traders unwinding their GBTC arbitrage positions, along with the shifting of assets from the FTX bankruptcy estate “Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors LLC, wrote in a note.

FTX’s sales may clear a supply overhang, suggesting that “GBTC’s strong selling pressure may soon fade,” Farrell added.

Bitcoin has surged nearly 160% over the past year, outperforming traditional assets such as stocks, amid speculation that the ETFs would encourage wider adoption of the cryptocurrency by institutional and retail investors. The token has been declining since the turn of the year and is lagging global markets.

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Tokens like Ether and BNB were little changed in Asia on Tuesday, as was Bitcoin, the largest digital asset, which is about $30,000 below its 2021 pandemic-era record of nearly $69,000.

“GBTC outflows have created dynamics in the market that need to be normalized before we see true price discovery,” said Leah Wald, CEO of digital asset investment firm Valkyrie Investments.