Bitcoin

Grayscale Bitcoin Trust

<p>The recent approval of a Bitcoin spot ETF by the SEC was initially met with enthusiasm, with Bitcoin rising briefly to over $48,000. However, Bitcoin has since fallen dramatically to under $41,000 at the time of this writing. Cryptocurrency analyst Wise Advice <a href="https://twitter.com/wiseadvicesumit/status/1748322049871991024" target="_blank" rel="noreferrer noopener nofollow">sees </a>several interrelated factors at play to explain this counterintuitive reaction:</p> 
<h2 class="wp-block-heading" id="selling-the-news">Selling the News</h2> 
<p>According to Wise Advice, a common occurrence in financial markets is what’s known as “buy the rumor, sell the news.” In anticipation of the SEC approving a Bitcoin spot ETF, major institutional investors and whales had been accumulating Bitcoin over the prior 6-7 months.</p> 
<p>However, once the actual approval occurred, a classic “sell the news” reaction kicked in, as these big players took the opportunity to take profits.</p> 
<h2 class="wp-block-heading" id="grayscale-liquidations">Grayscale Liquidations</h2> 
<p>At the same time, Wise Advice points out that Grayscale Bitcoin Trust (GBTC) has likely been dumping Bitcoin holdings. GBTC shares previously traded at premiums as high as 40% compared to the value of the underlying Bitcoin.</p> 
<p>However, this premium has evaporated. With GBTC no longer trading at a premium, shareholders have an incentive to sell at a profit versus continuing to pay Grayscale’s high management fees.</p>  
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<h2 class="wp-block-heading" id="miner-distributions">Miner Distributions</h2> 
<p>Adding further selling pressure, according to Wise Advice, bitcoin miners have also been distributing coins at a rapid clip. Miner reserves recently dropped over 10,000 BTC in a single day, falling to yearly lows.</p> 
<p>With miners paying bills and financiers seeking return on capital, miner distributions can amplify bearish market moves.</p> 
<p>In summary, Wise Advice believes that while the Bitcoin ETF approval removes a regulatory hurdle for broader institutional adoption, short-term profit-taking incentives for major holders initially outweighed this long-term bullish development.</p> 
<p>However, it remains uncertain whether BTC can hit $32,000 amidst the market slump. With several analysts laying out different projections, the possibility of a downward trend can’t be neglected.</p> 
<p>You may also be interested in:</p> 
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<p>The post <a href="https://captainaltcoin.com/why-is-bitcoin-dropping-after-the-spot-etf-approval-analyst-questions-whether-btc-is-going-to-32000/">Why is Bitcoin Dropping After the Spot ETF Approval? Analyst Questions Whether BTC Is Going to $32,000</a> appeared first on <a href="https://captainaltcoin.com">CaptainAltcoin</a>.</p>

Why is Bitcoin Dropping After the Spot ETF Approval? Analyst Questions Whether BTC Is Going to $32,000

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