United

Bitcoin

<p><strong>Despite the fanfare launch of ETFs, bitcoin has collapsed to $42,000. Why?</strong></p>
<h2 id="the-cause-the-gbtc-trust">The cause: the GBTC Trust</h2>
<p>Grayscale launched the very first publicly traded bitcoin fund in the United States as early as 2013. This Trust, named GBTC (Grayscale Bitcoin), trades on the OTCQX market.</p>
<div class="my-4">
 <div class="ads " data-page-type="" data-location="1">
 </div>
</div>
<p>For several years, Grayscale had been lobbying the SEC to transform its Trust into an <a href="https://www.cointribune.com/en/bitcoin-we-tell-you-everything-about-etfs/" target="_blank" rel="noopener noreferrer nofollow">ETF</a>, without success. Everything changed on August 29, 2023, when the District of Columbia Court of Appeals ruled in its favor.</p>
<p>This verdict was the second significant milestone towards ETF validation after BlackRock entered the fray two months earlier. The SEC finally approved all ETFs at once on January 10th.</p>
<p>However, <a href="https://www.cointribune.com/en/ethereum-etf-discord-at-the-sec/" target="_blank" rel="noopener noreferrer nofollow">Gary Gensler</a> seems to have been mischievous. The SEC chairman knew that GBTC’s clients would move to ETFs that offer eight times lower management fees.</p>
<p>That’s why the SEC insisted that all transactions to and from ETFs must be made “in cash,” not “in-kind.” As a result, clients leaving the GBTC cannot simply transfer their bitcoins. They have to sell everything for dollars first.</p>
<p>In other words, the shift from the trust to ETFs automatically triggers a dump of bitcoins on the market. Hence the downward pressure…</p>
<h2 id="h-gbtc-is-600-000-bitcoins">GBTC is 600,000 bitcoins…</h2>
<p>In two days, nearly 30,000 bitcoins were devoured by the 10 ETFs. That’s about $1.4 billion. Subtracting the net outflows from the GBTC Trust ($579 million, equivalent to 14,000 bitcoins), we get net inflows of +$821 million.</p>
<p>But then, why is bitcoin down if we have such large net inflows despite GBTC’s fund sales?</p>
<p>Because the ETF managers already held bitcoins in anticipation of D-Day. It’s therefore likely that they didn’t have to buy $821 million worth of bitcoin. It’s thus the sales from the GBTC Trust that impact the market most in the short term.</p>
<div class="my-4">
 <div class="ads " data-page-type="" data-location="2">
 </div>
</div>
<figure class="wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper">
  <div class="entry-content-asset">
   <div class="social-embed-container">
    <blockquote class="twitter-tweet" data-width="500" data-dnt="true">
     <p lang="en" dir="ltr">We’re in a period of market adjustment. <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">#Bitcoin</a> ETF’s just launched with billions in trading volume and BlackRock just took 11,500 BTC off the market. Meanwhile, GBTC holders are rotating out, pushing price down, and <a href="https://twitter.com/search?q=%24MSTR&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$MSTR</a> is trading below BTC par value. <a href="https://t.co/73hOFBxTK1" rel="noopener noreferrer nofollow">pic.twitter.com/73hOFBxTK1</a></p>— Samson Mow (@Excellion) <a href="https://twitter.com/Excellion/status/1746265524018032987?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">January 13, 2024</a>
    </blockquote>
    <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
   </div>
  </div>
 </div>
</figure>
<p>Another factor to consider is that several major US banks do not <a href="https://www.cointribune.com/en/millions-of-americans-banned-from-buying-bitcoin-etfs/" target="_blank" rel="noopener noreferrer nofollow">allow their clients to invest in ETFs</a>. This includes Citi, Bank of America Merrill Lynch, Edward Jones, UBS, etc. Therefore, a number of GBTC Trust clients cannot yet make their <a href="https://www.coindesk.com/markets/2024/01/15/jpmorgan-sees-significant-capital-from-existing-crypto-products-pouring-into-new-spot-bitcoin-etfs/?utm_term=organic&amp;utm_content=editorial&amp;utm_medium=social&amp;utm_campaign=coindesk_main&amp;utm_source=twitter" target="_blank" rel="noopener noreferrer nofollow">rotation</a>.</p>
<p>Nevertheless, it’s 11,500 BTC that BlackRock has already had to set aside to meet demand. That’s about 1/3 of the pie. Fidelity (FITB) and Bitwise (BITB) complete the podium:</p>
<figure class="wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper">
  <div class="entry-content-asset">
   <div class="social-embed-container">
    <blockquote class="twitter-tweet" data-width="500" data-dnt="true">
     <p lang="en" dir="ltr">In 2 trading days nearly 30,000 <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">#Bitcoin</a> was bought by the 10 newly approved spot <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BTC</a> ETFs<img src="https://s.w.org/images/core/emoji/14.0.0/72x72/1f447.png" alt="👇" class="wp-smiley" style="height: 1em; max-height: 1em;"><a href="https://twitter.com/search?q=%24IBIT&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$IBIT</a> <a href="https://twitter.com/search?q=%24FBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$FBTC</a> <a href="https://twitter.com/search?q=%24ARKB&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$ARKB</a> <a href="https://twitter.com/search?q=%24BITB&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BITB</a> <a href="https://twitter.com/search?q=%24BRRR&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BRRR</a> <a href="https://twitter.com/search?q=%24BTCO&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BTCO</a> <a href="https://twitter.com/search?q=%24HODL&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$HODL</a> <a href="https://twitter.com/search?q=%24EZBC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$EZBC</a> <a href="https://twitter.com/search?q=%24BTCW&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$BTCW</a> <a href="https://twitter.com/search?q=%24DEFI&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$DEFI</a> <a href="https://twitter.com/search?q=%24GBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">$GBTC</a> <a href="https://t.co/MmX5JQFiDP" rel="noopener noreferrer nofollow">pic.twitter.com/MmX5JQFiDP</a></p>— CC15Capital <img src="https://s.w.org/images/core/emoji/14.0.0/72x72/1f1fa-1f1f8.png" alt="🇺🇸" class="wp-smiley" style="height: 1em; max-height: 1em;"> (@Capital15C) <a href="https://twitter.com/Capital15C/status/1746732680144711864?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">January 15, 2024</a>
    </blockquote>
    <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
   </div>
  </div>
 </div>
</figure>
<p>In total, more than 30,000 bitcoins were absorbed by the ETFs in just two days. That’s nearly 33 days of BTC production. And 66 days before the “halving”…</p>
<p>At this rate, the 1.8 million BTC present on exchanges will be used up by next July. Bearing in mind that not all are for sale.</p>
<p>Patience; the green candle is coming.</p>

Why is Bitcoin dropping?

Table of Contents

Cointribune EN

Other articles published on Jan 15, 2024

BlackRock Spot Bitcoin ETF Ad Targeting Wealthy Boomers Praised As “So Boring It’s Brilliant”

Top Ten Blockchain Attacks of 2023

XAI Coin Soars Following Elon Musk’s AI Initiative

Crypto – The comeback of short sellers on Bitcoin

Poland to present new crypto-focused bill in Q2, report says

FOMO on SUI rise? These Altcoins posed to outshine it this week

Join our free newsletter for daily crypto updates!