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⚡$100 Billion Crypto ETF Price Crash🕹️

Croxroad

13 Jan 2024 — 3 min read

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👊 Fed Warning Tanks $100B Crypto ETF

The recent 10% drop in Bitcoin triggered a cascading effect, impacting Ethereum, XRP, Solana, and other top cryptocurrencies, collectively wiping out around $100 billion from the overall crypto market. This decline followed a surge in Bitcoin's spot exchange-traded fund (ETF).

Renowned trader Arthur Hayes, anticipating a potential 30% Bitcoin crash, had warned about a "vicious washout" in the coming months. Having loaded up on crypto in the second half of 2023, Hayes advised caution until April, foreseeing a risk-averse period.

Hayes explained that a 20-30% Bitcoin crash could occur due to a "dollar liquidity rug pull." Nevertheless, he predicted a swift rebound as the Federal Reserve resumes monetary expansion, emphasising Bitcoin's unique position as a global, non-banking system-associated hard currency.

Reflecting on the 2022 Bitcoin crash, attributed to the Federal Reserve's response to inflation, the market rebounded in 2023. The approval of spot Bitcoin ETFs, led by BlackRock, was seen as a significant development, though experts anticipate a mild "sell the news" effect. Despite potential short-term pullbacks, some investors view them as opportunities to significantly increase long positions.

💵 Record-Breaking Start

So, spot bitcoin ETFs (Exchange-Traded Funds) are having an active second day of trading, and the total volume has almost reached $7.1 billion. This coincides with a drop in the price of Bitcoin, which went below $44,000.

On the first day of trading, these ETFs saw substantial activity, with about $4.6 billion in buying and selling. The second day, so far, has seen over $2.5 billion in trading activity, as reported by Yahoo Finance data compiled by The Block.

Bloomberg Intelligence senior ETF analyst Eric Balchunas expressed his enthusiasm on Twitter, calling the first day a "smashing success" despite limited platform availability. BlackRock's newly launched spot bitcoin ETF stood out, leading in trading volume with over $1 billion and ranking among the top 25 performers on day one in ETF history.

Grayscale, a prominent player in the cryptocurrency space, led in volume on the first day with $2.3 billion. Initial speculations about outflows from Grayscale's fund were debunked by Bloomberg analysts, revealing only a $95 million reduction in the fund during the first day of trading.

As Friday's trading neared its end, Grayscale maintained its lead in day two volume with $1.5 billion, followed by BlackRock at $459 million.

In terms of inflows, Bitwise's spot bitcoin fund attracted $238 million in fresh capital on Thursday, potentially leading in this crucial metric. Fidelity secured the second spot with $227 million in inflows, while BlackRock attracted $112 million. Keep in mind that these figures may change as more data becomes available. Overall, the data suggests a strong and positive response to the introduction of spot bitcoin ETFs in the market.