Bitcoin drops 3.5% to $41K as spot Bitcoin ETF hype fades, GBTC outflows continue

Bitcoin (BTC) saw noticeable losses on Jan. 18, one week after the first Bitcoin spot ETFs began to trade on various exchanges.

BTC was worth $41,107 and reported a market cap of $805.8 billion at 9:50 p.m. UTC on Thursday. That decline marks a 3.5% loss over 24 hours.

Bitcoin’s current price of $41,107 represents a one-month low, as the cryptocurrency was last priced at $40,893 on Dec. 18, 2023.

The crypto market saw comparable losses, as it was down 3.7% over 24 hours. Losses extended to other top ten assets: Avalanche (AVAX) was down 7.8%, Solana (SOL) was down 7.4%, Cardano (ADA) was down 4.8%, Ethereum (ETH) was down 2.6%, and XRP was down 3.4%.

GBTC outflows, investor sentiment at play

Though the causes of BTC’s latest losses are uncertain, some changes are likely related to outflows or redemptions affecting Grayscale’s GBTC ETF.

Bloomberg ETF analyst Eric Balchunas provided data on Jan. 18 indicating that nine spot Bitcoin funds have seen $2.8 billion in inflows so far, but that this activity is offset by GBTC’s $1.6 billion outflows for $1.2 billion in inflows overall.

Balchunas asserted that spot Bitcoin ETFs are gradually “growing beyond GBTC bleeds.” Still, any Bitcoin redeemed from GBTC that remains in circulation increases the amount available on the market, which may affect prices.

Investor sentiment and activity — declining interest in Bitcoin following initial ETF hype — may also impact market conditions. Bryce Elder, a journalist for the Financial Times, called GBTC outflows a “neater explanation” but acknowledged the possible impact of investor activity. He wrote:

“Bitcoin’s [downward price] slide is inconvenient for crypto promoters who said spot ETFs would be crypto’s watershed moment, though they have plenty of tradfi-proven excuses: profit taking, better to travel than arrive, buy the rumour sell the news, etc.”

Other recent events concerning Bitcoin and crypto may have also affected investor sentiment. Notable developments over the past day include VanEck’s decision to terminate its Bitcoin futures ETF and Donald Trump’s opposition to central bank digital currencies (CBDC).