In a surprising turn of events, the approval of the bitcoin (btc) spot exchange traded funds (ETF) has not produced the expected immediate bullish impact on the price of bitcoin.
Contrary to expectations within the crypto community, btc has seen a sharp drop of over 16% since the ETF's approval on Wednesday, January 11, falling below the key $40,000 level. The failure of btc bulls to hold the support level has led to a testing phase at the $38,000 level, accompanied by a 4.5% price drop in the last 24 hours.
Bitfinex whales buck the trend
Amid market volatility, according According to Datamish, Bitfinex whales have been accumulating long bitcoin positions since November 2023. This accumulation of approximately 4,230 btc since January 17 marks the first sustained increase in Bitfinex btc long positions following a sharp decline in November last year.
However, the recent slowdown in btc price may be partly attributed to increased selling pressure from miners and asset manager Grayscale. Grayscale has noticeably increased its btc sell-off since ETF trading began.
Transfer a crypto-fund-exodus-bitcoin-etfs-attract-inflows/” target=”_blank” rel=”nofollow”>considerable amount of btc from the Grayscale Trust address to Coinbase, totaling 69,994 btc ($2.9 billion), has influenced market dynamics.
Additionally, reports indicate substantial sell-offs of GBTC shares from Grayscale's bitcoin Trust, including a notable sale of 22 million GBTC shares by the FTX estate, worth nearly $1 billion.
bitcoin settlement zones removed
Impact of Grayscale liquidation is evident in CoinGlass liquidation heat mapshowing the elimination of notable liquidation zones on the 1-week chart.
While Grayscale's btc dump has contributed to the price decline, the further accumulation of btc long positions on Bitfinex indicates potential change of feeling. A price reversal could occur if the $38,000 support line holds, pushing btc back above $40,000.
Furthermore, excluding GrayscaleInstitutional investors and asset managers involved in the ETF market have collectively acquired over 86,320 btc at an average price of $42,000, representing a substantial investment of $3.63 billion.
Market experts like Alí Martínez suggest that these institutions are likely to take a long-term strategic view rather than making maximum purchases. This level of institutional investment underlines the growing recognition of bitcoin as a legitimate asset class and signifies confidence in its long-term growth potential.
Currently, the price of bitcoin is at $38,800, reflecting a substantial year-to-date drop of over 12% and a 9.7% drop over the past seven days. The duration and extent of the selling pressure caused by Grayscale's btc dump remains uncertain, leaving the question of how much further the btc price can fall.
Featured image from Shutterstock, chart from TradingView.com
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