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Friday, Mar 01, 2024

Bitcoin Experiences Approximately 20% Decline in Value

Bitcoin has seen a sharp decline, dropping nearly 20% since January 11, coinciding with the debut of the first exchange-traded funds (ETFs) that invest directly in the cryptocurrency.
The price of Bitcoin soared to $49,021 when the ETFs, issued by companies like BlackRock Inc. and Fidelity Investments, were introduced. However, as of Tuesday morning in Singapore, Bitcoin's trading price had fallen to $39,718, representing a 19% decrease from the earlier peak.

The launch date marked the beginning of trading for nine new U.S. Bitcoin ETFs, and also saw the Grayscale Bitcoin Trust, with assets worth $22 billion, transition into an ETF format.

In the first week, the new ETFs attracted $1.2 billion, according to Bloomberg Intelligence's Eric Balchunas. The lion's share went to BlackRock’s and Fidelity’s Bitcoin trusts, while $2.8 billion was withdrawn from the Grayscale fund, partly due to FTX's bankruptcy estate selling off its stake.

Fundstrat's Sean Farrell notes that Bitcoin's recent performance has been influenced by tougher economic conditions and considerable sell-off from investors closing their Grayscale Bitcoin Trust arbitrage bets and the FTX estate liquidating its holdings.

However, Farrell suggests that FTX's disposals might ease the selling pressure associated with the Grayscale fund.

Bitcoin's value surged by almost 160% last year, overshadowing other assets like stocks, as ETFs were predicted to drive broader institutional and retail adoption of the cryptocurrency. Yet, since the beginning of this year, Bitcoin's value has receded, lagging behind global market trends.

Meanwhile, other cryptocurrencies, including Ether and BNB, were struggling in the Asian market alongside Bitcoin, which remains roughly $30,000 below its near-$69,000 peak from 2021.
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