Cryptocurrencies fall up to 5% this Monday, January 22 and continue without raising their heads. Bitcoin (BTC) starts the week below $41,000 while Ethereum is trading around $2,300. The losses are led by Solana, Dogecoin and Ripple (-4.2%).
The approval of BTC spot exchange-traded funds (ETFs) seems to have had the opposite effect to that expected and desired by the market. Since the Securities and Exchange Commission (SEC) authorized these investment products, the Bitcoin price fell by more than 15% from the intraday highs reached on Thursday (US$48,969.37).
Bitcoin: what are the reasons for the strong downward pressure
Most experts point out that a good part of the bearish pressure observed in space comes from Grayscale Bitcoin Trust (GBTC). And, as JPMorgan strategists indicate, the majority of investors are maximizing your profits after purchasing fund securities at a deep discount over the past year. In this sense, the New York bank estimates that the correction may not yet have come to an end, since barely 50% of the outflows that it estimates could occur would have occurred.
These analysts point out that, in addition, instead of seeing enormous Capital fluxes entering the crypto space in the short term, we will most likely see a rotation of assets in space, with investors looking for cheaper investment such as BlackRock’s iShares Bitcoin (Trust), whose management fee is several times cheaper than GBTC’s.
However, it’s not all bad news on this front. And, according to calculations by Eric Balchunas, Bloomberg ETF analyst, exchange-traded funds have achieved around 95,000 bitcoins in its first six days of trading, bringing its assets under management (AUM) to nearly $4 billion. Of these, more than half of the assets are distributed between IBIT (1.4 billion) and Fidelity’s FBTC (around 1.3 billion).
On the other hand, the price drop has caused some investors to turn more bullish on bitcoin. According to investment firm Paradigm, the king cryptocurrency’s implied volatility peaked last week and has been declining since then, falling below realized volatility. As a result, these experts note that options now look cheap, which could encourage some investors to bet on the increases in the coming days.
Likewise, other analysts point out that there are enough positive catalysts on the horizon to be optimistic. Among them stand out the future halving‘ or halving of the Bitcoin network, an event that has historically coincided with notable bullish cycles for the queen cryptocurrency, or the possible approval of ETH spot ETFs, which could occur as early as next May.
Is Ethereum the future?
In this sense, JPMorgan experts have indicated thate ETH could enjoy a better year than BTC once these exchange-traded funds are approved. On the other hand, the future update of the Ethereum blockchain, Dencun, could help solve some of the problems observed in recent months, which could boost prices even further.
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