As the first full week of trading for the recently released spot Bitcoin (BTC) ETFs comes to a close, the crypto community’s response to the results has been mixed, but overall, the launches are seen as a success.
The funds launched by BlackRock and Fidelity have both surpassed $1 billion in assets under management (AuM), while the Grayscale Bitcoin Trust (GBTC) experienced heavy outflows, with its AuM declining by $582 million. This put pressure on the price of Bitcoin as the BTC held by Grayscale was transferred to Coinbase for sale.
"If the previous $3 billion estimate proves correct and given $1.5 billion has exited already, then there could be an additional $1.5 billion still to exit the Bitcoin space via profit-taking on GBTC, thus putting further pressure on Bitcoin prices over the coming weeks," said JPMorgan analysts, led by Nikolaos Panigirtzoglou, in a note on Thursday.
The large volume of transfers to Coinbase shows that GBTC investors "have been taking full profit post-ETF conversion by exiting the Bitcoin space entirely rather than shifting to cheaper spot Bitcoin ETFs,” the analysts said.
Total net flows from the first five days of trading now stand at nearly $1.2 billion, and overall, 10 of the 11 ETFs have seen inflows totaling nearly $3.4 billion.
Data provided by Yahoo Finance shows that Grayscale, BlackRock, and Fidelity continue to dominate in terms of trading volumes as well, and the cumulative volume for all funds is now approaching $14 billion.
Another source of weakness for Bitcoin’s price is miners, who have been selling en masse following the run-up in BTC price seen over the past several months.
According to data from on-chain analytics provider CryptoQuant, Bitcoin miner reserves declined by 10,233 BTC on Jan. 17, which is roughly $450 million at current prices, and represents the largest daily decline in miner reserves in more than a year.
Miners have been accumulating Bitcoin since mid-2023 when it was trading sub-$30,000, a report from Bitnex shows, and they are now taking advantage of the price appreciation and booking profits ahead of the upcoming halving, which is expected to occur in April.
Miner reserves now sit at 1.83 million BTC, the lowest level since July 2021.
? #Bitcoin Miners in Selling Mode: Recent on-chain data from @cryptoquant_com indicates a substantial increase in selling activity by #BTC miners. In just the last 24 hours, they've offloaded nearly 10,600 $BTC, valued at approximately $455.8 million! pic.twitter.com/JEtasWfR6N
— Ali (@ali_charts) January 17, 2024
As a result of the selling, Bitcoin hit a low of $40,261 on Friday afternoon but has since been pushed back above $41,500.
BTC/USD Chart by TradingView
Mad Money host Jim Cramer has once again flipped bearish on Bitcoin following the price declines, tweeting, “Nasty beginning to the Bitcoin selloff. Someone's probably going to try to make a stand here, but as we said last night, you can't have an asset double in value by hundreds of billions of dollars in anticipation of an ETF and then almost no one shows up.”
“The legendary Larry Williams warning me that we are very far from the bottom in crypto,” Cramer added.
Gold-bug and known anti-Bitcoinist Peter Schiff shares a similar opinion as Williams.
It's been just one week since ten new spot #BitcoinETFs (not counting $GBTC) began trading and most are already in bear markets. Wall Street defines a bear market as a 20% decline from the peak price. This bear market is just getting started. #Bitcoin has a long way to fall.
— Peter Schiff (@PeterSchiff) January 18, 2024
A more balanced view of the developments was provided by Nate Geraci, president of the ETF store, who said the expectations on both sides of the (Bit)coin were off base.
“Why are people so angry about spot bitcoin ETFs…,” Geraci tweeted. “Such an odd phenomenon. You like getting BTC exposure via ETF? Great. Invest. Want to own BTC direct? Go for it. Mad that spot BTC ETFs didn’t make ‘price go up’? Welcome to financial markets. ETFs [are] simply a delivery vehicle.”
And Bloomberg Intelligence ETF analyst James Seyffart brought a little perspective on how ETF launches are supposed to look, and urged the market to, “RELAX.”
Here's a chart of the asset growth for the most successful new ETF category of recent years (in my opinion). Buffer ETF AUM (aka Defined Outcome ETF assets). For those thinking the #Bitcoin ETF launches were a flop.
R-E-L-A-X
Give it time. Healthy ETF growth looks like this: pic.twitter.com/4kAp4vfoZJ— James Seyffart (@JSeyff) January 18, 2024
