Bitcoin falls so far this year. The cryptocurrency had the approval of ETFs marked on the calendar for months, an investment product that allows the entry of institutional investors and other more conservative ones. A milestone that could serve to boost the value, trigger it according to the most optimistic, but for now it has not served as a catalyst.
Bitcoin has dropped below $40,000 these days, about 20% below the $48,000 it hit on January 11, when the US regulator gave free rein to spot bitcoin ETFs, according to CoinMarketCap records.
There are several factors behind the declines. Pulling from the newspaper archive, it is not a surprise. "There have been relevant events that have generated expectations like now. Whenever there has been this type of news there have always been short-term falls," explains Franco Macchiavelli, head of analysis at Admirals Spain. He states that in 2017, when the launch of futures was announced, it had risen with expectations and then fell 80%. In April 2021, with the IPO of the Coinbase exchange platform, there was another drop of more than 50% and that same year with the approval of futures ETFs, a drop of 75% followed. With the now approval of the spot ETF another 20%... "But after the falls, it goes up," he points out.
This is because more than one has applied the maxim of buying with the rumor and selling with the news. "The market always tries to get ahead." As an example, whoever bought bitcoin at the beginning of last month has seen a 20% revaluation until the day the ETFs were approved.
In the short term, he also points out this Friday as a day to take into account, since purchase options that had been placed above $40,000-42,000 expire. "With so many bullish expectations there were many purchase options that will expire and until they expire it will be more difficult to see increases," he explains.
Another factor is a certain rotation to other cryptos, especially ethereum. The alternative reflects déjà-vu: it is waiting for the authorities to give the green light to the first spot Ethereum ETF. The deadline for this is May 23. "Investors are trying to get ahead of approval," he says.
Finally, it is shocking that GBTC, the Grayscale ETF and largest holder of bitcoin, is moving bitcoins to Coinbase. "He sends them to the platform and along the way there is a sale," he details. Being a whale, a great actor, his movements are noticeable in the market. Added to this is that users may be making withdrawals to avoid higher commissions. "Everything comes from several fronts, a little newspaper library, a little Grayscale, a little options...", he summarizes.
In addition to GBTC, the Blackrock or Fidelity ETFs stand out. "Volatility is to be expected, since the market is still adapting to this new investment vehicle," explains Javier García de la Torre, director of Binance Spain and Portugal. The ETF increases accessibility, institutional recognition and could lead to greater adoption, he says. "In the days following approval more than 2 billion flowed into bitcoin ETFs. It is a significant amount, and suggests that there is strong demand for the new investment vehicle," says García. "He shows a great appetite."
"The function of the ETF is very clear, to allow investors who for regulatory or contractual reasons cannot be exposed to cryptocurrencies directly. This is being fulfilled," says Maximiliano Hinz, director of expansion in Spain and Latin America for the Bitget exchange. To assess how things are going, patience is required, to have a greater vision of investment inflows and outflows. According to Bloomberg, ETFs have captured $1 billion in net inflows as of Wednesday. "It is early to know if the ETF is going to bring more money to the trading table, but at first glance we understand that it is going to happen. Analysts agreed that the approval was going to bring quite high volatility during the first days. It is exactly what we are seeing, we have to wait for it to normalize," he adds.
To be more specific, Macchiavelli calls for looking at the funds' quarterly letters, where it will be clearer whether institutional investors are including ETFs in their traditional investment portfolios when rotating assets.
While waiting for clarity, another key event already appears on the calendar. In April, a new halving is expected, a process that every four years reduces the payment to miners and reduces the generation of supply. In the market there are usually increases every time one is completed. "In the last one we saw how it went from a value close to 8,000 to around 30,000. Past returns do not guarantee future returns, but there is a certain correlation between the operation and the price. If we add to that the arrival of institutional funds to ETFs , we can predict a positive future," predicts Hinz.
At Binance they also point to a positive environment. Regardless of macro factors, regulation or institutional adoption, ETFs "could pave the way for greater adoption and appreciation of cryptocurrency in the long term." It affects their potential and performance over longer periods. Although García warns: "It is too early to know how the price will behave. Variations are inherent to the cryptocurrency market."
"The underlying sentiment, of market trend, is bullish bias. The news or the expiration of options can have a short-term effect. But the halving and interest in ETFs in the medium or long term. When these last factors take effect weight after the noise, after the falls, bitcoin can rise...", launches Macchiavelli.
