More than $100 billion in Bitcoin capitalization 'evaporated' after ETF wave

From the area approaching 49,000 USD per coin when the ETF fund was approved in the US, Bitcoin has decreased in price by nearly 18%, wiping out more than 100 billion USD in capitalization.

Since late on January 19, Bitcoin has been continuously falling in price and ended the day down nearly 3%. At around 0:10, the world's largest cryptocurrency fell to around $40,280 per unit, the lowest level in more than a month. After that, Bitcoin gradually improved its market price and began to move sideways around $41,500 throughout the morning.

Overall, this cryptocurrency has had four consecutive days of negative closing prices. Since January 11, when Bitcoin ETFs were approved in the US, the market price of this asset has fallen nearly 18% from its peak of 48,969. As a result, the total market capitalization has dropped from nearly 913.7 billion USD to more than 790 billion, "evaporating" more than 120 billion USD.

CoinDesk’s Bitcoin Trend Indicator has also retreated from a significantly bullish level to neutral. The “buy the rumor, sell the news” strategy is seen as the main reason as investors continue to take profits after pouring capital into the market at a low price range.

Long before ETFs were approved, there were already many spot Bitcoin products being traded around the world, said Vetle Lunde, an analyst at cryptocurrency research firm K33. In fact, ETFs are just one of many types of exchange-traded products (ETPs). Other ETPs globally now hold more than 864,000 Bitcoins. Meanwhile, ETF issuers recorded just over 68,000 units in their first week of operation. This makes the emergence of ETFs a “relatively small explosion.”

Analysts at market research firm CryptoQuant said that several metrics and indicators still suggest that the correction may not be over, or at least that a new rally is yet to come. “Short-term traders and large Bitcoin holders are still selling significantly amid heightened risk-off sentiment,” the firm said in a recent report.

CryptoQuant predicted last month that Bitcoin could fall as low as $32,000 next month following the approval of an ETF.

In addition, investors' expectations for a similar ETF for Ether are also the reason for Bitcoin's price drop. Recently, many people have switched to using Ether and withdrawing capital from Bitcoin because they believe that good news will also come to this second largest cryptocurrency. However, investment bank JPMorgan predicts that the possibility of Ether ETFs being approved will not exceed 50%.

Xiao Gu (according to CoinDesk )

Source link