Markets News Report
January 22, 2024

Bitcoin’s Price Falls Below $41,000 as Investors Exit SEC-Approved Grayscale Bitcoin Trust

Bitcoin's Price Falls Below $41,000 as Investors Exit SEC-Approved Grayscale Bitcoin Trust Following its Conversion to ETF

Decentralized cryptocurrency Bitcoin (BTC) price fell below $41,000 on Monday morning, continuing its decline subsequent to the approval of several spot Bitcoin ETFs in the United States by Securities and Exchange Commission (SEC) earlier this month. At present, Bitcoin is trading at approximately $40,960 (at the time of writing), reflecting a 2.4% decrease for the day and a 4.5% decline over the past week, according to data from CoinGecko.

The decrease in Bitcoin’s price is associated with investors realizing their profits after the approval and subsequently exiting their positions in the Grayscale Bitcoin Trust (GBTC) due to its transformation into a spot Bitcoin ETF.

Prior to the conversion of the fund into a spot ETF, GBTC shares were exclusively accessible to accredited investors and subjected to a six-month lockup period post-purchase.

With investors currently having the option to redeem their GBTC shares for Bitcoin, over $2.2 billion has exited the fund in the last week. This has led Grayscale to transfer hundreds of millions of dollars in Bitcoin to its custodian Coinbase for selling. These outflows have played a role in creating selling pressure on Bitcoin, contributing to the decline in price over the two weeks since the approval of the SEC spot Bitcoin ETFs.

Analysts have additionally noted that the approval of the ETF was “priced in,” signifying that Bitcoin wasn’t anticipated to experience significant or prolonged increases following the approval. This perspective has led cryptocurrency investors to engage in “sell the news” behavior in the aftermath of the ETF approvals.

The Crypto Market’s Reaction 

The wider cryptocurrency market has declined following Bitcoin, decreasing by 2.7% over the last day, reaching $1.68 trillion, as reported by CoinGecko data. The global cryptocurrency market capitalization had surged to as much as $1.86 trillion the day following the SEC’s approval of 11 spot Bitcoin ETFs for trading. 

Among the top 10 cryptocurrencies based on market capitalization, Solana and Cardano have experienced the most significant drops over the past day, falling by 5.5% and 4.9%, respectively.

The decline in Bitcoin’s price follows the approval of spot Bitcoin ETFs by the SEC, prompting investors to cash in profits and exit Grayscale’s Bitcoin Trust (GBTC) after its conversion into a spot ETF, leading to increased market volatility. 

Disclaimer

In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.

About The Author

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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Alisa Davidson
Alisa Davidson

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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