Have Bitcoin ETFs Failed to Buoy Prices?

Bitcoin investors were really excited about the Bitcoin spot ETF approval. Some of them even invested more funds to cash out this opportunity. However, they didn’t experience any fruitful results in the last week. But that doesn’t mean that ETFs have failed completely.

ETFs are expected to bring more mature money to the crypto market but it’s not going to happen overnight. The results might be disappointing for those who were expecting Bitcoin to hit $1 million immediately after the approval of Bitcoin ETFs. However, it can be a healthy sign for long-term investors.

The following Bitcoin weekly news may highlight some details about how Bitcoin may perform over the coming days.

Bitcoin ETF Challenges

The current sell-off in the crypto market shows that the investors are following the ‘sell the news’ scenario. That’s why a huge number of investors booked profit in some of their long-term positions. Some analysts think that the sell-off was triggered by the speculators who were waiting for the approval of Bitcoin ETFs.

Grayscale’s Bitcoin ETF has reported an outflow of $579 million so far. It means that investors are redeeming their investments from Grayscale’s Bitcoin Trust (GBTC). The Bitcoin ETFs may experience these redemptions for some time and it may take a few weeks to adjust properly.

Grayscale currently has one of the highest fees in the Bitcoin ETFs category. These outflows may force the company to reduce their fees so they may compete in the market.

Bitcoin Price Prediction by Arthur Hayes

Arthur Hayes, the former CEO of BitMEX, says that Bitcoin ETFs can draw a huge amount of capital from traditional financial markets. He’s expecting a capital investment of billions of dollars because Bitcoin’s price movements don’t correlate with traditional assets. So, investors may consider choosing it as an option to fight off the effects of inflation.

Hayes further says that ETFs will potentially introduce new trading opportunities in the financial landscape. He predicts that new arbitrage opportunities might be introduced in the market following the emergence of spot ETF products in the Asian markets. The banks may also start offering fiat loans against Bitcoin ETF holdings following the recent updates.

Bitcoin Price Update by Anthony Scaramucci

SkyBridge’s Anthony Scaramucci has predicted Bitcoin’s price following the potential performance of newly listed exchange-traded funds (ETFs). He said that Bitcoin’s price could reach $170,000 by mid to late 2025. The prediction is not merely based on ETFs but he has also considered the upcoming halving event while predicting the price.

He also mentioned that investors are moving their funds from Grayscale Bitcoin Trust to the newly approved spot Bitcoin ETFs. So, the recent price decline can also be attributed to this sell-off.

The launch of Spot Bitcoin ETFs Might Just Be the Beginning

Bitcoin spot ETFs have reported a significant rise in trading volumes following the approval. BlackRock and Fidelity are the leading ETFs that have drawn a huge amount of trading volume. This rising liquidity is a sign that Bitcoin is widely accepted among Wall Street giants. However, investors need to understand that the changes may occur over time.

It’s worth noting that some companies like UBS, Vanguard, Citi, and others are still prohibiting their clients from purchasing these ETFs. Similarly, some financial advisers are also reluctant to expose their clients to Bitcoin ETFs. So, the ETFs might need to push a little harder to overcome the industry resistance. The companies have already started working towards it and it will eventually lead to broader acceptance and adoption.

Crypto Fear & Greed Index has Dropped to Neutral Levels

The Crypto Fear & Greed Index was continuously rising for a few weeks. But last week, it dropped back to neutral levels. The recent data shows that it’s the first time the index has reached these levels after October 2023. Bitcoin’s price jumped to $49,000 following the approval of spot Bitcoin ETFs.

However, the price couldn’t be sustained and dropped to $41,500 right on the next day. Before the approval of Bitcoin ETF applications, the index had reached a score of 76. Some investors are confused about why Bitcoin’s price is dropping after such positive news.

Bitcoin-based Tenant Agreement in Argentina

As discussed earlier, Bitcoin ETF approval can be a healthier sign for long-term investors. The Bitcoin-based rental agreement between a local landlord and tenant in Rosario, Argentina’s third-largest city, is evidence that Bitcoin is gradually getting accepted in the traditional markets.

Under this agreement, the tenant is going to release $100 worth of Bitcoin as a rental payment every month. The tenant is going to transfer the payments using a local crypto platform, Fiwind. President Milei is taking some significant steps to enhance the adoption of digital assets in the country.

Bitcoin Weekly Technical Analysis

Bitcoin’s price has performed according to the technical analysis that has been shared for past few weeks. It was highlighted in the previous week’s technical analysis that the price may breakout out of $48,200 following the spot Bitcoin ETFs approval. But it was also mentioned that the price may drop after that because Bitcoin’s price has continuously moved toward the upside since the beginning of September 2023.

Although the price has dropped a bit, there is still some room for further decline. $40,200 can be considered an initial support. But the price may drop even further if the selling pressure is high. The price needs to stay in a range for a few days so it may again continue its journey towards the upside.

Conclusion

While Bitcoin spot ETFs didn’t trigger an immediate surge, the current market turbulence and outflows from Grayscale suggest a ‘sell the news’ response. Industry experts foresee long-term benefits, anticipating capital influx and new trading opportunities. The launch of spot ETFs, with increased trading volumes from major players, signals broader acceptance.

Challenges persist, but ongoing efforts may lead to wider adoption. Recent acceptance in traditional markets, such as a Bitcoin-based rental agreement in Argentina, underscores the cryptocurrency’s integration. The Crypto Fear & Greed Index’s drop post-ETF approval highlights market uncertainty. Despite short-term challenges, ETF approval marks a significant step for potential transformative impacts.

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