Bitcoin Plummets Below $40,000 as ETF Outflows Trigger Sharp Decline
Crypto News – On Monday, Bitcoin (BTC) experienced a drop below $40,000, marking its first dip to this level since early December. This decline was primarily driven by a significant wave of outflows from Exchange-Traded Funds (ETFs), pushing the cryptocurrency into deeper territory.
Within the past 24 hours, more than $236 million worth of trades were liquidated, with approximately $208 million attributed to long positions. As of the time of writing, Bitcoin is trading at $39,504, a price level that was last observed on December 2, 2023.
According to Coinglass, over 90,000 traders faced liquidation in the last day, with the largest liquidation occurring on the Bybit exchange involving a $5 million BTC/USD trade.
The downward trend in Bitcoin’s price can be traced back to the approval of Bitcoin spot ETFs for trading on national securities exchanges on January 10. Although these new ETF products attracted significant inflows, their impact on the market has been largely offset by substantial outflows from the Grayscale Bitcoin Trust (GBTC).
Since converting into an ETF structure, GBTC has managed to eliminate its share discount, aligning it with the value of its underlying Bitcoin holdings. This change has resulted in substantial profits for early GBTC investors, many of whom are now selling their holdings. Consequently, Grayscale has been selling over $500 million worth of Bitcoin daily as the fund redeems its shares.