The U.S. Bitcoin ETF debut sparked excitement, but prices dropped after an initial surge, impacting long and short futures traders with $80 million in losses.
Spot Bitcoin ETFs made a historic debut, with $4.3 billion in trading volume on the first day, attracting institutional investors.

The debut of Bitcoin exchange-traded funds (ETFs) in the United States has left a significant mark on the cryptocurrency market, affecting both long and short Bitcoin futures bets to $80 million. The initial excitement surrounding these ETFs led to a rapid rise in Bitcoin prices, briefly pushing them above $49,000 and triggering a bullish sentiment that spilled over into other major cryptocurrencies like Ether (ETH) and Solana’s SOL. 

However, as the euphoria subsided, market observers noted that Grayscale’s Bitcoin ETF likely drove significant volumes driven by sellers, leading to a price reversal and liquidations for both long and short futures traders.

 The cascading effect of Bitcoin’s price drop extended to other cryptocurrency futures products, leading to over $230 million in liquidation losses. Surprisingly, these liquidations occurred despite the broader cryptocurrency market remaining relatively flat over the past 24 hours.

A Record-Breaking Debut

Additionally, these ETFs achieved a staggering $4.3 billion in trading volume on their inaugural trading day, surpassing all expectations. This remarkable performance has prompted industry experts to describe it as “easily the biggest Day One splash in ETF history.”

One of the standout performers on this historic day was BlackRock Inc.’s ETF, known as $IBIT. It exceeded $1 billion in trading volume and surpassed the previous record held by ProShares Bitcoin Strategy ETF ($BITO). Fidelity Investments also entered the fray with remarkable strength, recording $628 million in trading volume on its first trading day. 

While other ETFs, such as those offered by Valkyrie, WisdomTree, and Hashdex, had lower initial trading volumes, the overall enthusiasm in the market was palpable.

Market Outlook and Potential Impact

The SEC’s approval of Spot Bitcoin ETFs marks a pivotal moment for the cryptocurrency industry. Standard Chartered Bank has projected that these ETFs could attract between $50 billion and $100 billion in Bitcoin investments throughout 2024. When coupled with the upcoming Bitcoin halving event, this influx of new capital can potentially drive BTC’s price to $200,000 by the end of 2025.

While the approval of these ETFs is cause for celebration in the cryptocurrency realm, not all financial institutions are jumping on the ETF bandwagon. For instance, Vanguard has decided not to allow its clients to purchase these ETFs. The firm cited concerns about its “highly speculative” and “unregulated” nature, which contradicts Vanguard’s long-term investment philosophy. This stance has prompted some investors to transfer their accounts from Vanguard to Fidelity in response.

Bitcoin’s Whipsaw Effect

Following the launch of the first Bitcoi  n ETFs, the cryptocurrency market saw a surge in optimism. Bitcoin’s price, buoyed by the news, skyrocketed to over $49,000, fueling expectations of a sustained rally. This sudden spike also influenced other major cryptocurrencies, with ETH and SOL climbing as much as 10% within hours.

However, the initial enthusiasm was short-lived. Bitcoin’s price soon reversed course, dropping to as low as $45,700, the level it had been at before the ETFs hit the market. Since then, it has struggled to break above the $47,000 mark, leaving traders uncertain.

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Filed under: Bitcoin - @ January 12, 2024 7:00 pm