The Bitcoin price has plummeted below the $39,000 mark, the lowest level since December 2. This significant drop can be attributed to three main factors that have collectively contributed to the current market sentiment and price action.
#1 Selling Pressure From Grayscale’s GBTC Outflows
The market has been heavily influenced by the continuous outflows from the Grayscale Bitcoin Trust (GBTC). Bloomberg analyst James Seyffart commented on the severity of the situation, stating, “Woof. BAD day for Bitcoin ETFs overall in the Cointucky Derby. GBTC saw over $640 million flow out today. Outflows aren’t slowing — they’re picking up. This is the largest outflow yet for GBTC. Total out so far is $3.45 Billion.”
Nevertheless, the volume on the Bitcoin ETFs remained very strong, surpassing $2 billion, with GBTC accounting for over half of this volume. The total volume for the first seven trading days approached $19 billion.
Interestingly, while GBTC experienced significant outflows, the broader spot Bitcoin ETF landscape paints a different picture. Excluding Grayscale, the nine new ETFs have collectively amassed 95,000 Bitcoin ($3.8 billion), in stark contrast to the 65,000 Bitcoin ($2.9 billion) that flowed out of GBTC.
22,000 BTC have been from selling from the FTX Estate, meaning not flowing into others. While the cessation of this supply overhang is generally positive for the market, it remains crucial to monitor whether the outflows from Grayscale persist or intensify, even after the conclusion of the FTX-related sell-offs.
#2 Futures And Options Markets Cool Down
A significant contributor to Bitcoin’s price movement below $39,500 is the cooling of activity in the futures and options markets. Notably, the open interest in CME Bitcoin futures experienced a sharp decline, shedding over $1.64 billion following the approval of spot BTC ETFs, indicating a reduction in market leverage and speculative interest.
Crypto analyst Skew provided a nuanced analysis of the market dynamics, particularly focusing on the interplay between Bitcoin’s perpetual futures (perps) and the spot market. Skew noted, “Nothing too conclusive yet in perps market other than shorts becoming the dominant position in the market currently. Perp premiums often occurring during periods of spot limit selling into price. Spot premiums notably when perps push price into areas of limit bids on spot exchanges.”
This observation points to a shift…
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