Futures traders betting on higher cryptocurrency prices saw about $217 million in liquidations in the last 24 hours due to the approval of spot bitcoin. [BTC] ETFs remain a โsell the newsโ event, a contrarian bet that shows no signs of slowing down.
Concern that crypto fund manager Grayscale is selling some of its bitcoins while owners of its Grayscale Bitcoin Trust (GBTC) withdraw money from the ETF contributed to a drop in prices. Verified wallets belonging to Grayscale, tracked and tagged by Arkham analysis firmshow that the fund moved more than $400 million worth of bitcoin to custodian Coinbase Prime on Thursday, which could be a step toward an eventual sale.
Bloomberg Intelligence analyst Eric Balchunas also he pointed that GBTC shares fell on Thursday to a 0.9% discount to their net asset value "likely due to selling pressure."
On the "not a good sign" front, GBTC's discount has also reversed, the other way, up to 96 basis points, probably due to selling pressure, but who knows what we'll see in flows eventually. pic.twitter.com/T7eXrmH6Ju
- Eric Balchunas (@EricBalchunas) January 18, 2024
Even as GBTC experiences net outflows, other recently approved bitcoin ETFs are experiencing net inflows. BlackRock's IBIT exceeded $1 billion in assets under management (AUM) on Wednesday.
Bitcoin fell below $42,000 on Thursday night, down 3.7% from Thursday and down 15% from December's run to $49,000. It led to a market-wide pullback, with ether [ETH] falling 2.5%, Solana's SOL falling 6.5% and Cardano's ADA falling 5%.
BNB Chain's BNB outperformed the market and rose 0.6%, driven by launch platforms on the closely related Binance exchange, where users can stake BNB to get an allocation of new projects listed on the platform.
The price drop caused highly leveraged futures bets on higher prices to post losses of $217 million, and bitcoin trades suffered $88 million in liquidations alone.
Liquidation occurs when an exchange forcibly closes a trader's leveraged position due to a partial or complete loss of the trader's initial margin. It occurs when a trader cannot meet the margin requirements for a leveraged position (does not have enough funds to keep the trade open).
Meanwhile, some traders said in a note on Friday that they expect broader crypto markets to be range-bound in the near term.
โBTC is trading above the $40,000 to $42,000 zone, which will likely act as near-term support,โ Rachel Lin, CEO and co-founder of Singapore-based SynFutures, said in an email. โOverall, last week can be summed up as the calm after the storm. The ETF mania phase is over and the market is moving sideways, looking for the next trigger.โ
