Bitcoin has been under selling pressure from all sides for several weeks, causing it to fluctuate around $40,000. However, the highly anticipated launch of Bitcoin ETFs in the United States was expected to boost the crypto star.
Bitcoin bleeding caused by ETFs?
According to some crypto analysts, Bitcoin ETFs are partly responsible for this paradox. The Grayscale Bitcoin Trust (GBTC) is seeing massive outflows following the launch of cheaper spot Bitcoin ETFs.
With its fees of 1.5%, GBTC faces competition from new ETFs at only 0.25%. As a result, billions of dollars are leaving GBTC for more competitive products, generating forced sales of thousands of BTC.
This selling pressure could last another 2 months according to experts. Under its effect, bitcoin could fall towards $37,000, its lowest in 2022. Far from the hoped-for euphoria.
Crypto expert predicts over 700,000 BTC sales
A crypto industry expert also recently predicted upcoming massive sell-offs. According to his estimates, more than 700,000 bitcoin could be sold in 2024.
Between GBTC, MtGox and platform bankruptcies, hundreds of thousands of BTC could flood the crypto market soon and put pressure on prices.
Two factors behind the fall towards $40,000
Among the reasons for this recent downward spiral, we find an overheated crypto market even before ETFs as well as profit taking. The euphoria around Bitcoin ETFs quickly gave way to concerns. The fall towards $40,000 reflects excessive prior optimism and positions that are too high to correct.
Beyond ETFs, other upcoming events could still weigh on the price of Bitcoin (BTC) in the coming months. The Mt Gox affair is expected to dump an additional 138,000 BTC on the market by the end of 2023. The bankruptcies of Celsius and FTX could also liquidate tens of thousands of bitcoin.
Furthermore, American miners hold Bitcoin (BTC) reserves which could be partially sold. Even if the impact will be diluted over time, this offer risks prolonging the downward pressure. Finally, American regulators also hold seized BTC which they could gradually put on sale, weighing a little more on the crypto market.
This combination of bearish factors has led some to say that Bitcoin is going through a “perfect storm”, despite the promising launch of ETFs. But many believe these headwinds remain temporary. The true upside potential of Bitcoin ETFs could materialize in the long term. By absorbing these short-term shocks, the crypto could then begin a new surge.
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