Apparently, despite the 10% drop in the price of Bitcoin (BTC) since the debut of Bitcoin Spot ETFs in the USA, the sentiment in the crypto market continues to be optimistic.
Summary
Crypto market sentiment: there is optimism despite the Bitcoin (BTC) price dump
In the last seven days, exactly since the debut of Bitcoin spot ETFs in the USA, Bitcoin (BTC) has experienced a price dump of -10%.
And indeed, from the $48,625 touched by BTC a week ago, at the time of writing, instead, the price of BTC is $42,450.
Despite this unexpected price drop, the sentiment of the crypto market remains optimistic. Highlighting this is the score of 63 out of 100 on the Bitcoin Fear and Greed Index.
It was January 10, 2024, when the United States Securities and Exchange Commission (SEC) officially approved all 11 applications for Bitcoin Spot ETFs.
The Bitcoin Exchange-Traded Funds by ARK 21Shares, Invesco, Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton have become regulated.
The following day, the price of Bitcoin reached up to $48,625, but already on January 12th it began to see its descent. The minimum reached from that day was $41,715 on January 15th, to recover up to the current price.
Crypto market: sentiment remains optimistic, confirmed by CoinDesk 20 perpetual futures
CoinDesk has announced today that the bullish trend of crypto market sentiment is confirmed by its CoinDesk 20 (CD20) perpetual futures.
In practice, it seems that CD20/USDC are traded at a premium compared to the index price, at the beginning of today.
The message of optimism comes directly from the perpetual futures market of the Bullish stock exchange linked to the CoinDesk 20 (CD20) index, where funding rates were positive at the beginning of Thursday. Bullish is the owner of CoinDesk.
Specifically, perpetuals are futures without an expiration date, with a funding rate mechanism that involves periodic payments between long (buy) and short (sell) traders to ensure that the price of the perpetual aligns with the price of the underlying index.
A positive financing rate means that perpetual contracts are traded at a premium compared to the index price, with longs paying financing fees to shorts, indicating bullish market expectations. A negative rate suggests the opposite.
Grayscale protagonist of the Bitcoin price decline
On January 15th, it seems that Grayscale, the manager of the Grayscale Bitcoin Trust (GBTC), has transferred 9,000 BTC, in anticipation of an upcoming sale. This is probably the reason for the drop in the price of Bitcoin, although it is recovering.
In practice, after the approval of its spot ETF, Grayscale’s GBTC has recorded net outflows for selling by investors.
This move caused an outflow of funds for Grayscale, which had already had to sell 2,000 bitcoins the previous week, reaching a total of 11,000 BTC on January 15th.
At that moment, therefore, GBTC’s holdings were reduced to less than 610,000 BTC. This news caused a sudden drop in BTC of -2%.
