BTC ETF Euphoria Meets Reality

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After the approval of Bitcoin Spot ETFs by the Securities and Exchange Commission, the Bitcoin price initially showed no significant movement. This can be attributed to various factors such as OTC deals, limited availability of ETFs, challenges from major asset managers but most importantly the Greyscale ETF. But today we saw a big price drop of Bitcoin.

Let’s move on to the most important events of the last few hours, the possible reasons and what I’m going to do now.

Key Points

⬇️ First, despite the approval of Bitcoin Spot ETFs & yesterdays trading start, the Bitcoin price did not show a significant increase.
📉 OTC deals on Coinbase reached a record high of $7.7 billion, still indicating strong demand for Bitcoin.
💱 Bitcoin ETFs saw $4.6 billion in volume in first day of trading
See: https://www.reuters.com/technology/spot-bitcoin-etfs-start-trading-big-boost-crypto-industry-2024-01-11/
🔄 But volume is not inflow. Volume signifies both buying and selling! Notably, the Grayscale Trust saw many investors wanting to sell, as GBTC traded below the BTC price over the last 3 years.

Over the last 3 years, GBTC traded below the actual BTC price, leading “old investors” to likely grow tired of Grayscale and seek an exit. Those who bought in during the discount period may now be looking to realize their profits.

💸 Grayscale’s ETF, known for having by far the highest ETF fees, is seeing a trend of people wanting to exit.
🔍 Notably, the Grayscale trust (now ETF) holds the largest amount of Bitcoins in their ETF, approximately 600,000 BTC. This probably is one of the factors currently leading to the price decrease.
🛑 Additionall, news break that some major asset managers like Vanguard are not allowing their clients to invest in Bitcoin Spot ETFs, claiming questions about accessibility and adoption of crypto assets.

Analysis

When we zoom out, we see two things:

  1. The chart looks a lot better than when we focus only on the last few days.
  2. But, in the last 6 months we saw a 88% price increase and only one pullback (-20%). I have the feeling we are due to a correction, at least normally we have multiple -30% corrections during a bull run (see chart posted in pro-chat).

Where could the price go from here?

If we see a further price decline, we have support below $38,000. This would mean a -20% price dump. Perhaps the price correction that has been absent for weeks.

What I do now

I’ll put my buy orders in the green box for now.

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