Bitcoin experienced a retreat from its recent two-year high, with traders analyzing the outcomes of the highly anticipated first day of trading for cryptocurrency exchange-traded funds (ETFs).
Chris Newhouse, a DeFi analyst at Cumberland Labs, remarked, “With the first day of ETF trading behind us, it already feels like the crypto markets have moved on to looking toward the next narrative.”
The original cryptocurrency saw a decline of up to 10%, dropping to $41,469. Just a day before, Bitcoin briefly surged past $49,000 for the first time since December 2021 as almost a dozen ETFs entered the market. Other cryptocurrencies, including Cardano, Solana’s SOL, and Avalanche, also experienced declines.
On Friday, the share prices of all Bitcoin ETFs witnessed a downturn. Anthony Scaramucci, founder of SkyBridge Capital, attributed part of Bitcoin’s decline to the sale of Grayscale Bitcoin Trust shares. He noted, “There seems to be a lot of selling of Grayscale,” suggesting that investors were selling shares to lock in losses and shifting to alternatives with lower fees.
Zach Pandl, Grayscale’s managing director of research, argued that selling one Bitcoin product to purchase another shouldn’t impact Bitcoin’s overall price. He explained that with the potential approval of spot Bitcoin ETFs being a topic of discussion since Grayscale’s court victory last summer, it’s natural to witness some profit-taking after Bitcoin’s substantial valuation increase.
The bankruptcy estate of the failed FTX crypto exchange is also reportedly selling assets amidst the heightened market activity surrounding the ETF announcement, contributing to significant selling volume for Bitcoin.
Although complete flow data is not currently available, Bloomberg data indicates that at least $720 million flowed into the 10 Bitcoin ETFs on their debut day. The Bitwise Bitcoin ETF (BITB) led with nearly $240 million in flows, followed by the Fidelity Wise Origin Bitcoin Fund (FBTC) and the iShares Bitcoin Trust (IBIT).
The debut of the 10 spot Bitcoin ETFs resulted in approximately $4.6 billion worth of shares changing hands on Thursday. Notably, the Grayscale Bitcoin Trust (GBTC), existing in a trust structure since 2013, recorded $2.3 billion in volume, marking the largest-ever first-day turnover for an ETF.
Shares of companies associated with cryptocurrencies also faced extended losses, including Bitcoin proxy MicroStrategy, miners Marathon Digital and Riot Platforms, and the major US crypto exchange Coinbase Global.
