April 25, 2024
Crypto

Bitcoin Wavers as Crypto ETF Trading Gathers Steam. Where Prices Go Next.



Bitcoin

and other cryptocurrencies wavered Friday as volatile trading continued in the aftermath of the Securities and Exchange Commission’s approval of the first spot Bitcoin exchange-traded funds.

The price of Bitcoin has shed 1% over the past 24 hours to $45,950, having notched gains in this period as high as near $48,600—around its best levels since early 2022. Action in the largest digital asset has ramped up since the SEC’s late-Wednesday decision to approve a spate of spot Bitcoin ETFs, the first such funds in the U.S. to hold Bitcoin tokens themselves.

“Volatility has increased significantly over the past three days, but the price has repeatedly been brought back to the $46,000 area. On the other hand, we haven’t seen the much-anticipated ‘sell on the facts’ reaction yet,” said Alex Kuptsikevich, an analyst at broker FxPro. “A correction could drag the price below $40,000 but markets need an accompaniment from the deteriorating macroeconomic outlook. Without it, [Bitcoin] may well drift towards $50,000 or see another long sideways consolidation.”

Crypto bulls believe that spot Bitcoin ETFs, over the longer term, will usher in a fresh wave of investor interest in digital assets, especially from prized big-money institutional investors who may have stayed on the sidelines amid a lack of regulatory clarity. Immediately, however, the outlook is more uncertain, with many market participants bracing for traders to “buy the rumor, sell the news” after the SEC’s approval. While some profit-taking may be occurring, it has not developed at scale and could be offset by inflows into ETF products or other traders buying into the wider crypto hype.

Bitcoin-U.S. dollar trading volumes were up by some 30% across crypto exchanges on Thursday, according to data from CoinMarketCap, while traders piled into the 11 ETFs that debuted on Thursday. The


Grayscale Bitcoin Trust,

which converted to an ETF, was the most active,with $2.3 billion in total value traded—an all-time record for the fund that made it the ninth-most actively traded U.S. ETF on Thursday, according to data provided by Grayscale. 

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Dynamics across crypto markets are poised to go through a period of adjustment as capital flows into and around the space, with liquidity expected to shift between new ETFs and token exchanges like

Coinbase Global
.

“It seems that some investors have moved from crypto exchanges to owning the first cryptocurrency through an exchange-traded product,” said Kuptsikevich. “The launch of spot ETPs is a positive long-term move that supports the reputation and liquidity of the cryptocurrency market, but it by no means avoids a bumpy start to the journey.”

Beyond Bitcoin,


Ether

—the second-largest crypto—fell less than 1% to $2,620. Smaller tokens or altcoins also slipped, with


Cardano

down 2% and


Polygon

losing less than 1%. Memecoins recorded mild losses, with


Dogecoin

and


Shiba Inu

down less than 1% each.

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Write to Jack Denton at jack.denton@barrons.com



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