- Traders faced $217 million in liquidations amid rising crypto values and ETF approval.
- Grayscale is potentially selling Bitcoin, contributing to market pressure and GBTC discount.
- Bitcoin’s value falls, impacting the broader cryptocurrency market; BNB outperforms with a slight increase.
In the last few days, traders speculating on rising cryptocurrency values reportedly faced liquidations amounting to approximately $217 million. This occurred as the market reacted to the approval of spot Bitcoin exchange-traded funds (ETFs), a development that has become a “sell-the-news” event, where traders sell assets following positive news, and this trend shows no sign of abating.
Additionally, concerns have emerged regarding Grayscale, a prominent crypto fund manager, possibly offloading some of its Bitcoin holdings. This is due to the withdrawal of funds from its Grayscale Bitcoin Trust (GBTC) by investors. Notably, Grayscale’s activities have been monitored by Arkham, an analysis firm, which reported that Grayscale transferred over $400 million in Bitcoin to Coinbase Prime, a custodial service, last Thursday. This move is seen as a potential precursor to a sale.
Bloomberg Intelligence analyst Eric Balchunas also highlighted that on the same day, shares of GBTC shifted to a 0.9% discount relative to their net asset value. This shift is largely attributed to the increased selling pressure in the market.
This is interesting, the Newborn Nine actually saw a 34% jump in volume today vs yesterday. Normally with a hyped up launch you see volume steadily decrease each day post-launch, rare to see it reverse back up. All but one saw jump too but GBTC change flat so wasn’t a volatility thing.
Eric Balchunas
While Grayscale’s Bitcoin Trust (GBTC) experiences outflows, other recently authorized Bitcoin ETFs are attracting investments. Notably, BlackRock’s IBIT surpassed $1 billion in assets under management (AUM) as of last Wednesday.
Bitcoin’s value dropped below $42,000 late on Thursday, marking a 3.7% decrease since the beginning of the day and a 15% fall from its December high of $49,000. This decline led to a broader downturn in the cryptocurrency market, with Ethereum (ETH) dropping 2.5%, Solana (SOL) decreasing by 6.5%, and Cardano (ADA) falling by 5%.
In contrast, BNB Chain’s BNB performed better than other cryptocurrencies, showing a 0.6% increase. This growth is partly attributed to the launchpad initiatives on the Binance exchange, closely linked to BNB Chain. On these launchpads, users can stake their BNB to receive allocations for new projects listed on the platform.
The decline in cryptocurrency prices triggered substantial losses for highly leveraged futures bets on rising prices, totaling $217 million. Bitcoin futures alone accounted for $88 million of these liquidations.
Liquidation in the context of trading refers to a situation where an exchange forcibly closes a trader’s leveraged position. This action is taken when the trader incurs a significant loss, eroding their initial margin, or when they fail to maintain the required margin to keep their leveraged position open, indicating insufficient funds to sustain the trade.
In other market insights, some traders, commenting in a recent Friday note, anticipate that the broader cryptocurrency markets will likely experience limited fluctuations in the short term.
Rachel Lin, CEO and co-founder of the Singapore-based SynFutures, shared in an email that Bitcoin is currently maintaining a level just above the $40,000 to $42,000 range, which is expected to provide short-term support. She summarized the past week as a period of relative stability following the earlier excitement surrounding ETFs. According to Lin, with the ETF frenzy now subsided, the market is essentially moving sideways as it searches for the next significant catalyst.
