By almost every metric, the Bitcoin spot ETF is off to a great start. However, the long-awaited market debut of the ETF caused Bitcoin (BTC) to fall. As of this writing, Bitcoin has fallen about 15% since January 10, when the US Securities and Exchange Commission (SEC) approved the ETF.

What was considered the most bullish event in recent crypto history, with the potential to attract millions of new Bitcoin investors and billions of dollars, may actually be at least temporarily It is possible that the coin has cooled down.

The main culprit was the withdrawal of billions of dollars from the Grayscale Bitcoin Trust (GBTC), which transitioned from a closed-end trust to an ETF and investors were finally able to withdraw their funds.

More than $3 billion (approximately 444 billion yen, equivalent to 148 yen to the dollar) was withdrawn from GBTC, some of which went to other Bitcoin ETFs with fees far lower than GBTC’s 1.5%. There is.

bearish view

On social media, prominent venture capitalist Chris Burniske argued that Bitcoin has not bottomed out yet and predicted a price as low as $20,000. This is in line with the results of a recent Deutsche Bank survey, where one in three people said they thought Bitcoin could fall below $20,000 by the end of the year.

Just 15% of 2,000 respondents to a Deutsche Bank survey conducted in the US, UK and Europe said they saw Bitcoin stabilizing between $40,000 and $75,000 by the end of the year.

Is this negative sentiment surrounding Bitcoin correct?

Berniske apparently doesn’t see much positive development in the short term, and doesn’t mention the halving (scheduled for April), which many other market participants are expecting to see Bitcoin rise. .

Berniske wrote that “new product innovation is on the horizon, but we’re not quite there yet…I think the situation remains limited,” adding that “volatile” macroeconomic factors may be a factor. It added that it is likely to continue to put pressure on the coin.

Just as it is difficult to predict exactly what will happen, it is also difficult to find many long-term headwinds working against Bitcoin. On the regulatory front, it seems like the worst is over for the industry, with Binance settling with the Department of Justice and the FTX issue now settled.

Additionally, if it is true that continued capital outflows from GBTC are the main cause of the recent market decline, it is likely that this will end eventually.

For example, FTX has already sold all its GBTC. People who bought GBTC at a discount ended up getting Bitcoin at a cheaper price by converting it to an ETF. JP Morgan says that “GBTC profit-taking” is likely over.

There are always ups and downs

However, to put the recent decline into broader context, Bitcoin has fallen nearly 30%.

Meanwhile, the 2017 bull market began when the People’s Bank of China decided to ban crypto assets and regulated the then “big three” exchanges Huobi, OKCoin, and BTCC.

In other words, Bitcoin always has its ups and downs. While Bitcoin ETFs have been disappointing in terms of driving price appreciation, they still represent the long-term viability of Bitcoin.

Bitcoin ETFs have been recording record trading volumes for some time since they began trading, and according to a study by Deutsche Bank, the majority of capital inflows to Bitcoin ETFs are from individual investors. This shows that it is a tool that has the potential to promote the spread of coins.

As Berniske said, “As always, patience is your friend.”

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original text: Why Is Everyone Suddenly Bearish About Bitcoin?