Spot Bitcoin ETFs have been described as a turning point for cryptocurrency markets, especially Bitcoin. Towards the end of 2023, the leading asset management and brokerage companies of America lined up with the rumors and application fury. The successive applications and the wrangling between the United States Securities and Exchange Commission (SEC) made headlines for months.
The spot ETF process, which was moving day by day, managed to get the cryptocurrency markets out of the bear's grip after 2 years. Volumes increased along with volatility, news flow accelerated and the markets started to become interesting again.
Then, with the news of the SEC's approval of spot Bitcoin ETFs, a turning point for Bitcoin was achieved while the markets experienced serious rises: The world's largest companies had now incorporated Bitcoin.
The main expectation of this milestone was that new money would enter the cryptocurrency markets with spot Bitcoin ETFs, that with the inclusion of institutional investors, an unprecedented audience would be reached and cryptocurrencies would be accepted in traditional finance.
More than expected, spot Bitcoin ETFs reached a volume of $4 billion on the first day, surprising all analysts. In the following days, the volume accelerated and cash inflows followed. Spot Bitcoin ETFs, which achieved the performance of gold in 2 years in the first month, enabled brokerage houses to break historical records and stand out in the lists, ensuring that individual success was reflected in companies.
However, not everything was going so positively. Along with spot Bitcoin ETFs, a new reason for price pressure emerged: Grayscale's Bitcoin fund.
This fund, which was created before the Spot Bitcoin ETFs, was converted into an ETF with the adoption of ETFs and turned into a seriously profitable investment for investors who joined the fund at a low price. Since these investors wanted to realize their profits, unlike other spot ETF service providers, they continuously sold, causing selling pressure on Bitcoin.
However, these sales did not pose a serious obstacle due to the much higher inflows. However, the recent war crisis has negatively affected not only cryptocurrencies but all markets, just like the previous Ukraine-Russia process. With this effect, the bitcoin price and volumes were negatively affected.
As the price fell, the "hype" around ETFs began to fade and inflows slowed. Although the sales on the Grayscale side decreased compared to the first days, daily ETFs started to close negatively due to the slowdown in inflows, which started to have an impact on the price. The fall in the price affected spot ETFs and spot ETFs affected the price, creating a process that triggered each other.
The war crisis was not the only reason for the fall and the decline in volumes. On the one hand, the realization of the long-awaited halving in Bitcoin was also seen as one of the factors in the decline, as there was no longer a reason to price in the market.
On the other hand, the policies pursued by the US also caused the cryptocurrency markets to be negatively affected, just like the traditional financial markets. The FED had promised to cut interest rates more than once in 2024. However, the fact that a cut has not yet been made as we approach the middle of the year, and the fact that the incoming data does not show that a cut can be made, negatively affected the assets that are considered risky assets.
When all these effects came together, spot Bitcoin ETFs experienced significant inflows and volume declines.
If we take a look at spot Bitcoin ETF movements on a weekly basis:
Week 1: +19,512 Week 2: +8.220 Week 3: -10.200 Week 4: +18.757 Week 5: +26.200 Week 6: +44.376 Week 7: +11.007 Week 8: +31.037 Week 9: +33.633 Week 10: +35.179 Week 11: -13.495 Week 12: +11.303 Week 13: +5.635 Week 14: -1.226 Week 15: -1.698 Week 16: -5.176
It is said that the $ 60,000 level is critical given the regions where current investors are priced on Spot Bitcoin ETFs. Due to the considerable number of investors costing above this level, it is predicted that sales may accelerate outside of Grayscale, as well as creating an opportunity for purchase.
