2024 has already proven to be a wild trip for Bitcoin investors. In what was likely the most exciting financial product launch in history, the SEC approved 10 spot Bitcoin ETF products for trading in U.S. marketplaces.
In reaction, BTC prices rose to a new multi-year high, reaching $49,102. The market then fell 18% over the weekend, reaching fresh year-to-date lows of $40,236.
As with any important event, holders of Bitcoins enjoy debating whether it was priced in or not.
In this regard, Julio Moreno, the head of research at CryptoQuant, debunks the widely circulated narrative that the Bitcoin price drop was caused by Grayscale’s GBTC selling Bitcoin.
There’s a narrative circulating that the current Bitcoin price correction is due to GBTC selling Bitcoin. IS NOT.
GBTC has sold about 60K Bitcoin. The other ETFs combined have net purchased about 72K Bitcoin.
The selling has come from Bitcoin holders (short-term traders and…
— Julio Moreno (@jjcmoreno) January 19, 2024
Before being converted to an ETF from a trust, Grayscale Bitcoin Trust (GBTC) was one of the only options for stock traders in the United States to obtain exposure to Bitcoin price swings without having to purchase the actual cryptocurrency.
While GBTC has seen remarkable outflows after its uplisting into an ETF, a chunk of these have been from investors moving to lower-fee ETFs.
Moreno highlighted that, while GBTC sold approximately 60,000 Bitcoins, other Bitcoin ETFs net purchased roughly 72,000 Bitcoins, thus offsetting the sales of BTC from Grayscale’s GBTC.
He attributes the volatility in Bitcoin’s price to selling by Bitcoin holders (short-term traders and whales) who took profits following last year’s surge, noting that the ETF approval might just be the “sell-the-news” event.
What on-chain data says
According to on-chain analytics firm Glassnode, Bitcoin’s price drop might have been driven by both derivatives leverage and spot profit taking.
However, several metrics in both the on-chain and derivatives domains suggest that a non-trivial portion of Bitcoin investors did treat the ETF approval as a sell-the-news event.
While there are other key driving factors behind the interim volatility, both futures and options markets have seen a meaningful uptick in open interest (OI) since mid-October, according to Glassnode.
Open interest in both markets remains around multi-year highs, showing that leverage is rising and becoming a more dominant force in markets.
At the time of writing, BTC was up 0.58% in the last 24 hours to $41,543, per CoinMarketCap data.
