Why Did Bitcoin Price Fall Despite ETF Approvals?

YEREVAN (CoinChapter.com) — The price of Bitcoin, the largest cryptocurrency in terms of market cap, is on a decline despite the recent approval of spot Bitcoin ETFs by the US Securities and Exchange Commission. While writing, the BTC price hovers just above the $40,000 mark, having dropped from the near $47,000 it reached earlier this month. 

The price of BTC has slumped despite the spot Bitcoin ETF approval.
The price of BTC has slumped despite the spot Bitcoin ETF approval. Source: CoinStats

This decline in Bitcoin’s price could be for a series of reasons, as highlighted by crypto analysts globally. 

1. Massive Bitcoin selloff ahead?

According to a recent survey by market intelligence firm IntoTheBlock, continuous inflows of Bitcoin have been noted into centralized exchanges (CEXs) over the past six weeks. This number, totaling almost $2 billion in net deposits, usually indicates a massive sell-off ahead. 

There are several reasons behind the Bitcoin price fall despite the recent spot ETF approvals by the US Securities and Exchange Commission.
Into The Block’s post about Bitcoin price fall. Source: X

Per the same analysis, crypto wallet addresses holding over 1,000 BTC have increased their holdings. In contrast, those with fewer than 1,000 Bitcoins reduced their holdings in this month. 

“Most of the addresses decreasing their balances are those that have held Bitcoin for 1-12 months. At the same time, Long-term holders haven’t been buying as strongly as they’ve done in the past months, with a slight decrease in overall Bitcoin held by this group,”

 the firm noted

IntoTheBlock suggests that this be a temporary setback rather than bears taking over. However, this shift from long-term to short-term holders may have contributed to the price fluctuation. 

3. Miners’ Outflow at Six-Year High ahead of Bitcoin halving 

According to a recent post by Bitcoin News, miners’ outflow has hit a six-year high with $1 billion worth of BTC being sent to exchanges. This comes weeks ahead of the next Bitcoin halving event scheduled for April, which is expected to result in reduced income for miners.

Traditionally this trend has indicated bearish sentiments in the market, with increased supply on exchanges contributing to downward pressure on Bitcoin price.

There are several reasons behind the Bitcoin price fall despite the recent spot ETF approvals by the US Securities and Exchange Commission.
Outflow of Bitcoin Miners reaches highs not seen in six years. Source: Bitcoin News via X

However, those analyses are based on events before the spot Bitcoin ETF approval. Currently, the market dynamics have changed. One has to wait to see what this exodus means. 

4. Short-term profits push Bitcoin price down

Notorious Bitcoin cryptic and Gold maximalist Peter Schiff believes the recent Bitcoin price fall is due to the selling pressure caused by traders capitalizing on short-term gains. 

In a recent post on X (formerly Twitter), he noted that the outflows from certain trusts and the selling of BTC exceeded the combined inflows into all Bitcoin Exchange Traded Funds. This, according to him, has contributed to the Bitcoin price drop.

Peter Schiff's post about BTC price drop.
Peter Schiff’s post about Bitcoin price drop. Source: X

In another post, he suggested that Bitcoin ETFs are taking the attention away from BTC as traders rush to put their money in the new asset class rather than in the crypto directly. 

“The new BitcoinETFs aren’t creating additional demand, but merely shifting demand. Investors who might have bought actual Bitcoin, Bitcoin related equities like $MSTR, or $GBTC are simply buying the new ETFs instead. Rearranging the deck chairs won’t stop the ship from sinking,” 

he insisted

7. Bearish expectations about Bitcoin’s price

According to a recent report by Deutsche Bank, as cited by Bloomberg, the recent Bitcoin price contraction is a big concern for retail investors. As the survey suggests, several traders expect to see a further decrease in BTC value by the end of 2024.

Many investors are bearish about the Bitcoin price.
Majority of the survey participants are bearish about the Bitcoin price.

Approximately 15% of those surveyed see Bitcoin’s price hovering between $40,000-$75,000 by the year’s end. However, over one-third of the respondents expect Bitcoin’s value to plunge below $20,000 by January 2025. 

This negative sentiment in the market is another potential reason why the Bitcoin price fell despite the recent ETF approval in the US. 

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