The crypto market is in a downtrend to start the week as Bitcoin (BTC) bears look to break the back of support at $40,000; at the same time, bulls are doing all they can to stave off a move lower amid declining momentum.
With the launch of the first spot BTC ETFs in the U.S. now in the rearview mirror, there is no immediate catalyst driving the price action or exciting traders. This has led to increased profit-taking, resulting in declining prices as traders look to realize the gains seen over the past three months.
Data provided by TradingView shows that Bitcoin’s price drifted lower throughout the early trading hours on Monday after holding steady above $41,600 over the weekend. Constant pressure from bears has bulls struggling to maintain support at $40,300, and Bitcoin looks poised for further declines in the absence of a notable development that reignites upward momentum.
BTC/USD Chart by TradingView
“Bitcoin wrapped up [last] week at around $41,600, marking a slight 0.4% decline from the prior week's closing value of approximately $41,750,” said Matteo Greco, research analyst at Fineqia International. “The price displayed reduced volatility compared to the previous weeks, finding increased stability following the SEC's approval of the ETFs, putting an end to speculation on the matter.”
Greco noted that the new spot BTC ETFs in the U.S. have “collectively attracted around $1.15 billion in cumulative inflows,” with BlackRock’s ETF leading the pack after accumulating roughly $1.4 billion in assets under management (AUM), closely followed by the Fidelity Spot ETF with approximately $1.26 billion in AUM.
“This influx was partly offset by the fact that among the 11 Spot ETFs launched, one was the Grayscale Bitcoin Trust (GBTC),” he said. “GBTC, not a new product but a Trust trading since 2015, underwent conversion into an ETF. This product experienced substantial outflows of about $2.81 billion since the conversion, reducing the total inflow of the 11 BTC Spot ETFs from about $3.96 billion to $1.15 billion.”
The number of Bitcoin held by GBTC has declined from 620,000 BTC to roughly 552,000 BTC, he said.
“The strong outflow can be attributed mainly to two factors: firstly, GBTC customers were restricted from redeeming shares and could only sell them on the secondary market due to the product's structure, before the conversion,” Greco said. “This compelled many customers to hold their positions for years without an exit option unless they were willing to sell at a significant discount in the secondary market.”
“Secondly, the higher management fee set by Grayscale (1.5%) compared to most competitors (0.2%/0.3%) led some investors to withdraw their investment from Grayscale, either to cash in profits or reinvest in more cost-effective ETFs,” he added.
The cumulative trading volume of the new ETFs “amounted to about $16.6 billion in six days of trading, averaging about $2.77 billion daily,” he said. “As anticipated, GBTC saw the highest volume, given the massive amount of BTC held in custody and the dynamic activity related to the Trust's conversion into an ETF.”
The successful launch of the spot BTC ETFs now has analysts and investors turning toward the potential launch of ETFs for other digital assets, including Ethereum. “Analysts predict, with over a 70% likelihood, the approval of Ethereum (ETH) Spot ETFs this year,” Greco said.
“This expectation is reinforced by analyzing ETH's price action,” he said. Immediately after the approval of BTC Spot ETFs, capital shifted from BTC to ETH. ETH appreciated by 17% against BTC in the approval week and 11% in dollar terms, indicating that market participants are banking on the approval of ETH Spot ETFs following the green light for BTC Spot ETFs and are adjusting their positions accordingly.”
As for now, the broader crypto market finds itself under pressure, with all but eight tokens in the top 200 trading in the red at the time of writing.
Daily cryptocurrency market performance. Source: Coin360
Bitcoin last traded at $40,645, a decline of 2.4% on the 24-hour chart.
