Thursday was a day of consolidation for the cryptocurrency market as Bitcoin (BTC) continued to trade sideways below $40,000, while altcoins were a mixed bag, and the total crypto market cap increased by 0.32%.
Stocks climbed higher, and the S&P 500 hit a fresh all-time high after an advance estimate of fourth-quarter U.S. GDP showed the economy grew at an annualized pace of 3.3% during the period, much faster than the 2% expected by economists.
At the market close, the S&P, Dow, and Nasdaq all finished higher, up 0.53%, 0.64%, and 0.18%, respectively.
Data provided by TradingView shows that Bitcoin traded in a range between $39,510 and $40,280 on Thursday, with bulls and bears evenly matched for strength. At the time of writing, BTC trades at $39,910, an increase of 0.40% on the 24-hour chart.
BTC/USD Chart by TradingView
Kitco senior technical analyst Jim Wyckoff noted that “bears are working on a fledgling price downtrend on the daily bar chart,” and currently have a “slight overall near-term technical advantage.”
The primary source of weakness for Bitcoin continues to be large sales by Grayscale as the firm processes GBTC redemption requests from clients.
Bloomberg ETF analyst James Seyffart noted that on the ninth day of trading, the ETFs combined saw outflows of $158 million, the “largest single day net outflow so far.”
Day 9 complete for the #Bitcoin ETFs. BlackRock only took in $66 million. -$158 million outflow for the entire group which is the largest single day net outflow so far pic.twitter.com/I8dsFMs9vT
— James Seyffart (@JSeyff) January 25, 2024
Realizing that the focus on Bitcoin ETF flows has been dominating the conversation, Seyffart tweeted, “Don't know who needs to hear this, but ETFs aren't THE market themselves.”
“Yes they're now a big slice of the pie but there's a lot more to the pie,” he added. “Bitcoin ETF inflows can coincide with falling Bitcoin prices. Outflows can coincide with rising prices. Shouldn't be confusing. People don't have a hard time understanding this with equities or bonds or gold or any other asset class. Funds are a subset of the supply and demand balance that makes a price. They are not the only piece of demand or supply in the market.”
To stress his point, Seyffart said, “Believe me – if ETF flows predicted how markets moved... my god would I be rich.”
While many are concerned that large sell-offs could continue as Grayscale still holds more than 500,000 BTC, analysts at JPMorgan think the GBTC profit-taking is mostly concluded.
The analysts, led by Nikolaos Panigirtzoglou, previously estimated that GBTC would see $3 billion in outflows. With the total now past $4.3 billion, they said that the expected profit-taking has largely happened already. "In turn, this would imply that most of the downward pressure on Bitcoin from that channel should be largely behind us," the analysts said in a note on Thursday.
“There appear to be two emerging competitors to Grayscale's Bitcoin ETF: Blackrock and Fidelity, which have so far attracted $1.9 billion and $1.8 billion of inflows respectively,” the analysts said. “They both have much lower fees of only 25 basis points (without waivers) vs 150 basis points for GBTC.”
The note said that while the launch of multiple products has been confusing for some, they add a new layer to Bitcoin price discovery, aligning it with traditional markets, especially in equities where ETFs are common.
"While, at face value, the introduction of spot bitcoin ETFs implies more fragmentation, in practice, it would increase market depth and liquidity if the experience of ETFs in traditional asset classes such as equities is a guide," they said. "In other words, we expect that the emergence of Spot Bitcoin ETFs would make the Bitcoin price discovery process more rather than less efficient."
Altcoins start to stabilize
Altcoins traded mixed on Thursday, with the top 200 tokens evenly split between winners and losers.
Daily cryptocurrency market performance. Source: Coin360
Meme token dogwifhat (WIF) led the gainers with an increase of 15.7%, followed by a 14.5% gain for Chiliz (CHZ), and a 12.6% climb for IOTA (MIOTA). Siacoin (SC) suffered the largest drawdown, decreasing by 21.9%, while NEM (XEM) fell by 19.9%, and SKALE (SKL) lost 11%.
The overall cryptocurrency market cap now stands at $1.55 trillion, and Bitcoin’s dominance rate is 50.3%.
