Bitcoin prices tanked Friday, letting go of the recent gains associated with the much-awaited approval of exchange-traded funds (ETFs) backing the cryptocurrency and marking another curious case of bitcoin dipping following seemingly good news for the asset.
- Bitcoin fell almost 7% by midafternoon, trading close to $43,000.
- That would be bitcoin’s biggest daily loss since August and its second-worst day since November 2022 amid FTX’s unraveling, according to Yahoo Finance data (bitcoin trades constantly and daily movements are typically tracked on Greenwich Mean Time).
- The steep losses come two days after U.S. regulators greenlit 11 spot bitcoin ETFs, a move many expect to bolster bitcoin’s value as it drastically increases access for prospective investors,with the dip in bitcoin appearing to be a case of investors buying the rumor and selling the news.
- Though bitcoin is now trading at its lowest level in a week, it has retained much of the gains linked to the ETF hype; bitcoin is up about 130% over the last 12 months and still sits at its highest level since April 2022, excluding the last two weeks.
- “The crypto market has already moved to the next narrative,” Citi analyst Alex Saunders explained to clients in a Friday note seen by CNBC. Major stock indexes and government bond yields were largely unchanged Friday.
Contra
Saunders pointed to the comparatively stronger returns posted recently by ether, the world’s second-largest cryptocurrency by market value, as evidence of the market already refocusing on the possibility of future approval for similar ETFs tracking ether prices. Ether prices are up 16% this week, far outpacing bitcoin’s 0.2% gain during the period.
Key background
Other instances of bitcoin prices falling when an announcement of a long-awaited boon include April 2021’s roughly 15% selloff when crypto exchange Coinbase went public and October 2021’s almost 10% drop upon the approval of the first ETFs tied to bitcoin futures contracts. Also slumping so far in 2024 are public stocks closely connected to crypto. Shares of Block, Coinbase and Robinhood are down more than 10% apiece year-to-date, far underperforming the tech-heavy Nasdaq’s 0.5% gain this year. Bitcoin prices collapsed about 65% in 2022 as a spate of bankruptcies hit the crypto industry and macroeconomic conditions worsened.
Big number
About $4.5 billion. That’s how much flowed into spot bitcoin ETFs during their inaugural day of trading Thursday. Grayscale and BlackRock’s funds attracted the most volume.
Source: forbesmiddleeast