Bitcoin (BTC) has seen
a modest 0.4% increase to $42,680 this week, reaching as high as $43,500 on
Tuesday before facing pressure from disappointment over the approval of spot
Bitcoin-ETFs and a general decline in market sentiment.
Spot Bitcoin-ETFs fell short of Bloomberg's
forecasted $4.0 billion on their first day of operation, instead accumulating
around $800 million. Investors approached the new asset cautiously, opting to
take profits from Bitcoin's rally that commenced on October 16, 2023. Grayscale
reported capital outflows of $579 million from its ETF on the first trading
day, with potential losses reaching $1.0 billion by the end of January.
Grayscale sold 2,000 BTC last week and plans to sell an additional 9,000 BTC
this week.
In contrast, BlackRock IBIT performed well,
securing approximately $500 million during the initial two trading days, while
Fidelity FBTC attracted around $420 million. Other ETFs varied in performance
based on their fees and commissions, with BlackRock emerging as the leader due
to its appealing options securing the biggest market share.
Despite Grayscale's challenges, spot
Bitcoin-ETFs experienced positive capital inflows. However, crypto exchanges
faced the opposite scenario, with Cumulative Volume Delta (CVD) indicating
capital outflows of around 5,000 from Binance compared to net inflows on
January 11. Investors had anticipated a BTC rally post-spot Bitcoin-ETF
approval, but this failed to materialize.
Further capital reallocation toward ETFs is
anticipated, potentially resulting in declining trading volumes for crypto
exchanges. Coinbase, positioned at the center of spot Bitcoin-ETFs trading, may
surpass Binance in terms of volumes, as it exhibits a positive CVD this month.
Coinbase stocks surged by 400% in 2023, outpacing Bitcoin's 160% rise.
From a technical perspective, the crypto
market appears vulnerable until the end of February. BTC reached its upside
targets at $49,000-51,000 per coin. It is crucial for the major cryptocurrency
to maintain its gains without a significant correction leading up to the
halving event in April. The key support level is at $40,000, and a dip below
this level would signal major challenges for the industry.