Crypto bulls lost $217 million in the past 24 hours as the price of bitcoin (BTC) dropped below $42,000. This was due to a number of factors, including:
- Fears of crypto fund Grayscale selling its bitcoin holdings. Verified wallets belonging to Grayscale, tracked and labeled by analysis firm Arkham, show that the fund moved over $400 million worth of bitcoin to custodian Coinbase Prime on Thursday, likely in preparation for an eventual sale.
- The “sell-the-news” event. The approval of spot bitcoin (BTC) exchange-traded funds (ETFs) has been a “sell-the-news” event, with traders selling their holdings after the initial excitement has worn off.
- Highly leveraged futures traders betting on higher prices. These traders were forced to liquidate their positions as the price of bitcoin fell, leading to losses of $217 million.
How did the ETF approval affect bitcoin prices?
The approval of spot bitcoin (BTC) exchange-traded funds (ETFs) has had a mixed impact on bitcoin prices. On the one hand, it has legitimized bitcoin as an investment asset and has made it more accessible to institutional investors. On the other hand, it has also led to a “sell-the-news” event, with traders selling their holdings after the initial excitement has worn off.
What is the outlook for the crypto market in the short term?
Some traders believe that the crypto market will be range-bound in the short term, with bitcoin prices hovering around the $40,000–$42,000 zone. Others believe that the market could see further downside if Grayscale does indeed sell its bitcoin holdings. Ultimately, the outlook for the crypto market will depend on a number of factors, including the overall health of the global economy, the regulatory environment, and the development of new technologies.