Bitcoin has plummeted below $40,000, marking a nearly 5% loss in 24 hours and over 7% in the past week.
The decline is attributed to the unwinding of Grayscale’s Bitcoin Trust, now a spot BTC ETF, with investors rapidly cashing out and putting downward pressure on the cryptocurrency.
Bitcoin (BTC) has recently witnessed a substantial decline, with its value sinking below the $40,000 mark. According to CoinGecko data, the cryptocurrency is currently priced at $39,754, registering a nearly 5% loss in the last 24 hours and a significant 7% drop over the past week.
Grayscale Unwind Sparks Market Turmoil
This downward trend comes amid the continued unwinding of Grayscale’s Bitcoin Trust, a development that has been impacting the broader cryptocurrency market. Grayscale, once a closed-end investment vehicle, has undergone a transformation into a spot Bitcoin exchange-traded fund (ETF). This transition has allowed investors to swiftly cash out their holdings, leading to a substantial outflow of funds.
In recent weeks, the spotlight has been on the approval of Bitcoin ETFs, a move that brought cryptocurrency to Wall Street. While anticipation initially led to a surge in Bitcoin’s value, the subsequent approval of 10 Bitcoin ETFs triggered a change in sentiment. Contrary to the expected positive impact, Bitcoin experienced a dip, falling below $40,000.
Grayscale’s Exodus Exerts Downward Pressure
The primary driver behind Bitcoin’s current dip is widely attributed to the substantial amount of money exiting the ETFs, particularly Grayscale’s Bitcoin Trust. Previously, as a closed-end investment vehicle, Grayscale made it challenging for investors to redeem their shares. However, as it converted to a spot BTC ETF, investors have been quick to liquidate their positions.
Grayscale is currently sending billions of dollars in Bitcoin to its custodian, Coinbase, resulting in increased selling pressure and contributing to the overall decline in Bitcoin’s value. The impact is not limited to Bitcoin alone, as other major cryptocurrencies are also experiencing negative price movements.
Market-Wide Decline
Ethereum (ETH), the second-largest cryptocurrency by market cap, is down over 6% in the past 24 hours, trading at $2,336. Similarly, Solana (SOL), the fifth-largest cryptocurrency, has seen a sharp decline of over 9%, with its current price standing at $83.86.
The recent market turmoil challenges earlier expectations regarding the positive influence of Bitcoin ETFs. As Grayscale’s unwinding continues to unfold, investors are closely monitoring the dynamics of the cryptocurrency market, reevaluating their strategies in response to the shifting landscape.
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