On Tuesday, January 23, Bitcoin (BTC) dropped below the coveted $40,000 mark for the first time in two months after institutional sales linked to the recently launched Bitcoin spot exchange-traded funds (ETFs) continued to exert downward pressure on the apex cryptocurrency.
BTC Drops to Two-Month Low As Bitcoin Spot ETFs Suffer Record Outflows
It has been two weeks since the approval and launch of the first BTC spot ETFs in the US, and it is clear that the short-term effects of the funds’ have so far been unfavorable to Bitcoin and the overall crypto market.
Initially, the US Securities and Exchange Commission’s (SEC) approval of the ETFs on January 10 propelled the price of BTC to nearly $50,000. However, the cryptocurrency’s price reversed almost immediately and slumped to under $42,000 on the second trading day.
Bitcoin did manage to recover some of the losses and return to the $43,000 level, where it spent most of the second trading week. However, the last seven days have been hard on the leading cryptocurrency as it declined to around $41,000. The negative momentum carried over this week as BTC dropped to $39,000 yesterday.
As of press time, Bitcoin (BTC) is trading at $39,664 – down 1% in the last 24 hours.
Bankrupt Crypto Exchange FTX Sold 22 Million GBTC Shares, Causing BTC to Decline
The latest decline in BTC price can be linked to the failed cryptocurrency exchange FTX’s bankruptcy estate selling around 22 million shares of Grasycale’s GBTC exchange-traded fund over the past few weeks to raise funds.
Since the crypto asset manager’s Bitcoin trust was permitted by the SEC to be converted into a spot Bitcoin ETF on January 10, it has experienced over $3.4 billion in outflows. It has been reported that Grayscale also deposited billions of dollars worth of BTC to Coinbase Prime with the intention of selling.
Bloomberg’s senior ETF analyst Eric Balchunas noted that $515 million in outflows were recorded on January 23 from GBTC, which resulted in a 13% reduction in shares outstanding. He also highlighted that the latest data was indicative of a potential slowdown in the outflow rate.
The most recent outflow is linked to FTX reportedly selling two-thirds of its GBTC shares over three days of trading. It is believed that the now-defunct crypto exchange still holds around 8 million shares that are worth approximately $281 million.
Crypto Market Cap Declines To $1.5 Trillion As Altcoins Suffer Losses
Alternative cryptocurrencies also suffered the bleed as they traded in the red over the last 24 hours. Ethereum (ETH), the largest cryptocurrency after BTC, plunged by 5% pushing its price to under $2,300. Meanwhile, Binance Coin (BNB), Ripple (XRP), and Toncoin (TRON) also declined by similar ratios.
However, the biggest losses were suffered by the likes of Solana (SOL), Cardano (ADA), Avalanche (AVAX), Dogecoin (DOGE), Polkadot (DOT), and Chainlink (LINK), which declined by -8%, -6%, -10%, -6%, -8%, and -8% respectively.
Meanwhile, the total market capitalization of the crypto market has declined to $1.5 trillion. The metric is down by $60 billion over the past 24 hours and about $100 billion since Sunday.
