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Bitcoin has fallen sharply over the past two weeks as some investors take advantage of the much-hyped Bitcoin exchange-traded fund launch earlier this month to lock in profits and exit their volatile crypto holdings. It lost 15% of its value.
price of Bitcoin It fell as much as 3% on Tuesday, dropping below $39,000 for the first time since early December, but recovered slightly in afternoon trading.
The recent losses come amid frenzied speculation that the launch of a mainstream stock market fund tracking the world's leading cryptocurrency tokens will attract new investors to Bitcoin. This means that part of the huge uptrend has been reversed.
However, the flow is ETF Many of the companies launched by Wall Street giants such as BlackRock have disappointed, leaving investors who bought them with large losses.
The 10 new funds launched on January 11 after receiving approval from the U.S. Securities and Exchange Commission had raised a total of $4.7 billion by the end of Tuesday, according to crypto investment group CoinShares. On the day the ETF was launched, Bitcoin traded at $46,100, but has been steadily declining since then.
At the same time, the Grayscale fund, the world's largest Bitcoin investment vehicle, has seen $3.4 billion in outflows since it was converted into an ETF upon its new launch.
![Line chart of Bitcoin price ($) showing Bitcoin has fallen 16% since the SEC approved a series of ETFs to track Bitcoin.](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F6369e5a0-b9f3-11ee-8f87-a392a5471cf0-standard.png?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
![Line chart of Bitcoin price ($) showing Bitcoin has fallen 16% since the SEC approved a series of ETFs to track Bitcoin.](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F6369e5a0-b9f3-11ee-8f87-a392a5471cf0-standard.png?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
Analysts believe much of the money in the 10 new funds is likely to come from investors exiting Grayscale, which charges much higher fees than its competitors.
“What people didn’t realize is that the withdrawal from Grayscale would be huge,” said Douglas Comyn, senior crypto options trader at XBTO. “If you scratch the surface, you will see that most of the inflows are not new money, just investors moving from Grayscale to another ETF.
„These ETFs were highly anticipated, but we now know that (a Bitcoin bull run) is not going to materialize, at least not as quickly as the market would like,“ he added.
Grayscale's 10-year Bitcoin Trust transformation allows some investors who for years were only able to sell their trust shares at a deep discount to Bitcoin's price to fully exit their holdings. became. The fund's overall size fell from $28 billion earlier this month to $22 billion as of Monday's close.
“ETFs bring liquidity and allow people to get in, but also allow people to get out,” said Varun Paul, director of market infrastructure at blockchain platform Fireblocks. “Some investors bought Bitcoin a long time ago and have exited their positions, so they are in the money.”
Grayscale lowered its 2% management fee to 1.5% in preparation for the ETF's launch, but its fees are still significantly higher than those of its competitors.
In contrast, BlackRock charges just 0.12%. But if the company's ETF pulls in $5 billion in assets under management, that number would rise to 0.25% next year. The US group has raised $1.7 billion so far.