SINGAPORE – Bitcoin posted its worst streak in about a month amid ebbing fanfare over new US exchange-traded funds (ETFs) for the largest digital asset.
The token fell as much as 1.9 per cent before paring some of the slide to trade at US$42,239 as at 9am on Jan 15 in Singapore. It has dropped for four straight days, the worst such run since mid-December. Smaller crypto coins struggled for much traction, with Ether, BNB and Solana posting mixed performance.
The batch of almost a dozen ETFs, including from investment titans BlackRock and Fidelity Investments, began trading on Jan 11. Bitcoin briefly hit a two-year high above US$49,000 after they went live but then began retreating.
The spike and quick turn lower have the hallmarks of a “buy-the-rumour, sell-the-fact reaction” that some market watchers had expected, Mr Tony Sycamore, a market analyst at IG Australia, wrote in a note. He sees a possible slide to US$38,000 to US$40,000 based on the signals from chart patterns for Bitcoin.
Supporters of Bitcoin’s contentious role as a store of value contend that the first United States spot ETFs for the token herald increased investor access to the cryptocurrency. Sceptics point to 2022’s deep crypto crash and ensuing bankruptcies as reasons for caution about wider adoption despite a partial market rebound in 2023.
In a post on social media site X, Bloomberg Intelligence’s senior ETF analyst Eric Balchunas said the new US spot funds achieved a net inflow of US$819 million (S$1.09 billion) over the first two days of trading. Contributing to the total was US$500 million for BlackRock’s iShares Bitcoin Trust and US$422 million for the Fidelity Wise Origin Bitcoin Fund.
The US$26 billion Grayscale Bitcoin Trust – the largest such fund – saw US$579 million of outflows after converting into an ETF last week, Mr Balchunas said. The fund previously had a closed-ended structure and traded at a discount to its underlying holdings in 2023, spurring some to bet on the gap narrowing.
Speculators taking profits on that trade, now that the discount has all but gone, may be part of the reason for Bitcoin’s recent weakness, wrote Ms Noelle Acheson, author of the Crypto Is Macro Now newsletter.
“It’s very unlikely that all the outflows from the Grayscale Bitcoin Trust went back into Bitcoin,” she said. “The new funds are likely to continue to see strong inflows over the next week, as money on the sidelines is funnelled in and as the marketing machines get going. This could be offset in the short term from more outflows as speculative positions are unwound.” BLOOMBERG
