Bitcoin Slides 15% After ETF Approval, Investors Pull $1.5B from GBTC

Bitcoin's price fell 15% to around $41,300 following the launch of U.S. spot BTC ETFs, leading to a significant outflow from the Grayscale Bitcoin Trust, while Ether (ETH) shows potential for growth in 2024 amid ETF expectations and network upgrades.

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In a week marked by significant movements in the cryptocurrency market, Bitcoin (BTC) experienced a sharp 15% decline, dropping to approximately $41,300. This downturn coincides with the introduction of the first U.S. spot BTC Exchange-Traded Funds (ETFs). According to financial analysts at JPMorgan, this period also saw an exodus of $1.5 billion from the Grayscale Bitcoin Trust (GBTC).

GBTC Withdrawals

Experts at JPMorgan suggest that many investors, who had previously bought into GBTC at a substantial discount in anticipation of its conversion to an ETF, are now capitalizing on their investments. Rather than transitioning to more cost-effective spot bitcoin ETFs, these investors appear to be exiting the bitcoin space entirely.

This trend was predicated on JPMorgan's estimate that around $3 billion had been invested in GBTC on the secondary market in 2023 to leverage the trust's discount to its Net Asset Value (NAV). With this in mind, the market may anticipate an additional $1.5 billion withdrawal from the space, potentially applying further downward pressure on Bitcoin's value in the upcoming weeks.

Ether Dynamics Changing

Conversely, Ether (ETH) is garnering attention with a more optimistic outlook for 2024. Analysts at Coinbase (COIN) anticipate a potential surge in ETH's value, propelled by expectations of a spot ETH ETF listing. Following the approval of Bitcoin ETFs in the U.S., ETH reached its highest price since May 2022. Major firms behind BTC ETFs, including BlackRock and VanEck, are reportedly exploring similar ETF products for ETH, as highlighted in Coinbase's weekly newsletter.

Beyond ETF prospects, Ethereum's forthcoming Dencun upgrade, aimed at enhancing the mainnet's scalability, is also expected to boost investor interest in ETH. The ETC Group, a leading institutional crypto firm, underscored Ether's bullish prospects in its annual report, citing Ethereum's dominant status in the DeFi space and the additional returns available through staking.

Ark Invest Shifts to BITO

In a related development, ARK Invest executed significant transactions in the cryptocurrency ETF market. On Wednesday, ARK Invest sold an additional $15 million in shares of the ProShares Bitcoin Strategy ETF (BITO), following a $15.8 million sale the previous day.

This move aligns with ARK's strategy to pivot towards its own spot bitcoin ETF (ARKB), as it swapped the BITO shares for $15 million worth of ARKB. ProShares' Bitcoin product, which debuted in October 2021, was the first U.S. ETF tied to the BTC futures market. ARK's shift from Grayscale Bitcoin Trust to BITO last year, in anticipation of U.S. approval for spot bitcoin ETFs, has now evolved into a focus on its own ETF product, marking a significant shift in the firm's investment strategy.

This dynamic period in the cryptocurrency market underscores the evolving landscape of digital asset investments, as institutional players and individual investors alike navigate the complexities of ETFs and market trends.