Bitcoin surprises again After dropping well below $39,000, the most famous digital coin has managed to rebound, approaching the $42,000 threshold. This price movement occurred amidst a slowdown in outflows from the Grayscale Bitcoin Trust (GBTC) and mixed results from newly launched Bitcoin ETFs. Thus, the cryptocurrency market continues its exciting, though sometimes turbulent, journey, full of unexpected twists.
Recently, Bitcoin (BTC) experienced a significant rebound, crossing the $41,000 level and approaching $42,000. A key factor here was the slowdown in outflows from the Grayscale Bitcoin Trust, which seems to be a signal of stabilization in this part of the market. According to BitMEX Research, the outflows from GBTC amounted to $394.1 million on January 25, a decrease compared to $429.3 million on Wednesday and $515.3 million on Tuesday.
It’s noteworthy that since the launch of Bitcoin ETFs on January 11, GBTC recorded the second lowest outflow result. While still high, the noticeable reduction may signal a trend change. In total, net outflows from Bitcoin ETFs amounted to $79.6 billion, with the largest part being a one-day net outflow from GBTC of $394 million.
The actions of newly launched ETFs, such as BlackRock, Fidelity Investments, and Bitwise, which have not yet recorded outflows, are also of interest. IBIT stands out, having recorded the largest inflows – $170.7 million. Despite these positive results, the total value was not enough to offset the outflows from GBTC, resulting in a net outflow of nearly $80 million.
It’s also worth looking at recent price movements of Bitcoin. Its current price is $41,881, representing a 4.78% increase over the last 24 hours. However, the cryptocurrency recently experienced a drop of over 20% from its peak of around $49,000 on the day of the Bitcoin ETF launch, reaching a low of $38,600 a few days ago.
This market volatility led to significant liquidations, mainly of short positions, resulting in losses exceeding $66 million. Long positions contributed to total liquidations of about $44 million. The current annual volatility of Bitcoin, according to The Block, is 53.95%, an increase from about 42% at the beginning of January.
Analysts at JPMorgan, led by Nikolaos Panigirtzoglou, expect a limited further decline in Bitcoin. They attribute the recent price drop to profit-taking in GBTC, but warn that further outflows may occur if the 1.5% GBTC fee is not reduced, which could result in a loss of market share to competitors with lower fees.
Chris Burniske, a partner at Placeholder VC, expresses skepticism, speculating that Bitcoin could fall to at least the $30,000-$36,000 range. While he believes in the long-term strength of the trend, he warns of the current volatility and potential macroeconomic challenges.
The impact of Bitcoin ETFs on the ecosystem remains significant, but the upcoming Bitcoin halving event is also beginning to shape market sentiment. This event, during which the reward for mining Bitcoin will be halved, may bring further changes in prices and investor behaviors, adding another chapter to the fascinating story of this digital currency.
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