Bitcoin Price Drops Despite Record Profit: Are Investors Eyeing Stability Before Big Moves?
Summary:
On January 12, Bitcoin's price fell to $43,306 following the introduction of BTC spot ETFs on the stock market. Despite initial excitement, large investors seem to be taking a cautious approach, waiting for the market to stabilize before making substantial investments. This comes as other financial indicators like long liquidations and an increase in BTC transferred to exchanges may signify potential market pressure. Despite this, with a record number of BTC wallets currently profiting, there's potential for future bullish performance.
On January 12, Bitcoin (BTC) recorded an unexpected dip to the day's price of $43,306, which followed closely on the heels of spot BTC ETFs' appearance on the stock market scene. Despite a vigorous upward swing that sent BTC soaring towards $49,000 just a day prior, the price of BTC slipped 5% below its initial value of $43,954 on Friday.
Enthusiasm around the U.S Securities and Exchange Commission's approval of spot Bitcoin ETFs appears to be simmering down. Here's an in-depth look at today's key influences on Bitcoin's market performance.
Are influential investors steering clear of spot ETF trading?
In the immediate aftermath of the advent of spot Bitcoin ETF trading, investors are still making sense of the ground rules. Institutions with extensive capital are known for their cautious approach and careful maneuvers in the world of finance, generally preferring to watch from the sidelines initially, biding their time until the market finds its footing before making substantial financial commitments.
Thus, the Bitcoin market's tempered reaction to the launch of spot ETF trading may be the calm before the storm; an adjustment phase that could usher in significant upward shifts as funds start pouring in.
As per data from Yahoo Finance, spot Bitcoin ETF trading's second day saw a trading volume exceeding $1 billion, taking the cumulative volume of spot Bitcoin ETFs well over the $5 billion mark. At the commencement of the second day's trading session, BlackRock's Ishares Bitcoin trust (IBIT) kicked off at $25.27 and registered a 9.5% loss over the last 24 hours. At present, IBIT's volume stands at $11.3 million.
Meanwhile, Grayscale Bitcoin Trust (GBTC) and the Valkyrie Bitcoin Trust (BRRR) reported a dip of 5.5% and 10% respectively over the same duration. The two entities’ trading volumes are approximately $27.8 million and $112,980.
Bitcoin's immediate price plummet may be credited to sudden shifts in the Bitcoin futures market and a corresponding rise in Bitcoin long liquidations. In just an hour on January 12, Bitcoin long liquidations shot up to $12.52 million.
Long liquidations typically become evident when the asset price plummets unexpectedly, leading to losses for traders who anticipated an upward trend and had placed long bets correspondingly.
Data sourced from blockchain data analysis platform, Glassnode, indicates a surge in the volume of Bitcoin transferred to exchanges on January 10, hinting at an increase in market selling pressure.
Moreover, Glassnode data suggests a record number of Bitcoin wallets are currently turning a profit, standing at 46.8 million. Coupled with the downward trending trading volume, the high number of investors choosing to cash in on their profits may well be driving Bitcoin's price fall.
Despite a fleeting peak close to $49,000 on January 11, Bitcoin continues to encounter heavy resistance at the $50,000 mark. After a drop below this level in May 2021, and another drop of over 77% following a failed attempt to regain this level in March 2022, the immediate goal for Bitcoin supporters is to push past the $45,000 mark hoping to transform the substantial $50,000 level into a support for the uptrend.
However, the market remains unpredictable and any investment or trading venture is fraught with potential risk. It's recommended for interested parties to undertake comprehensive research before approaching any financial decision.
Published At
1/12/2024 11:12:48 PM
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