Bitcoin returned to sideways trading since yesterday evening and settled near the $34,000 level after exceeding the $35,000 level at dawn yesterday.
As for Ethereum, it is trying to consolidate at the $1,775 level after failing to maintain the $1,850 level yesterday. While Solana is still facing solid resistance from the $32 level.
Cryptocurrency declines come from record highs during the second half of this year after markets digested news at the beginning of the week anticipating the imminent launch of BlackRock’s iShares Bitcoin Trust.
We had witnessed listing of the exchange-traded fund (ETF) by Depository Trust and Clearing Corporation (DTCC), which carried the symbol IBTC, which ignited investor sentiment and pushed Bitcoin to the level of $35,000. Meanwhile, the ETF was subsequently removed from the regulations and re-listed again.
Later yesterday, a DTCC spokesman said that the ETF has already been listed by the clearing company’s since last August. He also said that this a standard procedure that comes within the preparations for launching any ETF and does not mean confirmation of the launch, as this cannot happen without regulatory approval.
It appears that the positive sentiment that pushed Bitcoin higher at the beginning of the week was not strong enough and is quickly dissipating as the market realizes what is certain so far; There is no confirmed imminent launch of Bitcoin spot ETFs. It seems that we will not see the first of these ETFs before the beginning of next year.
After the hype around the listing of IBTC subsided, we began to see a wave of profit-taking and noticeable liquidation of long positions. According to data provided by CoinGlass, yesterday we witnessed the liquidation of the equivalent of $132 million in Bitcoin long positions, which is the largest liquidation in one day since last September 11.
This appears to reflect market expectations that Bitcoin will not be able to hold above the $35,000 level.
On the other hand, yesterday we witnessed a continuation of the liquidation of short positions, with the equivalent of $153 million in short positions being erased after about $275 million the previous day. However, it does not seem that this violent liquidation of short positions was able to push Bitcoin towards further gains, as the markets had hoped.
As a result of the mixed sentiment in the markets, we see a clear division regarding investors’ future expectations. The ratio of buying to selling positions approached parity at 0.9693 this morning, meaning sellers had a slight advantage over buyers.
As for the beginning of this week, Ark Invest, which is managed by Cathie Wood, disclosed that it had sold some of its holdings in shares of Coinbase and Grayscale Bitcoin Trust (GBTC) for the equivalent of approximately $2.5 and $3 million each.
While this sale does not necessarily mean that Cathie Wood is retreating from her support for the cryptocurrency market, but rather it may come within a profit-taking selling after the recent gains, after the discount from the net asset value of GBTC reached its lowest level since the year 2021 at about 11% last Friday. This may appear to be a selling opportunity.
It seems that negative sentiment and expectations may continue to dominate market trading until real and confirmed news emerges again.
Even with the launch of Bitcoin spot ETFs, the very positive outlook remains betting only. This has already been pointed out by one of the most prominent critics of cryptocurrencies, Peter Schiff, who said that the recent rises in the price of Bitcoin are based solely on the hope that investors will pour their money into Bitcoin ETFs, and he also continues to criticize Bitcoin for having no intrinsic value or utility.
I agree with Schiff on his view on the recent rises in Bitcoin. Indeed, market fundamentals are still weak and cryptocurrencies are struggling to gain widespread adoption.
Uncertainty will also continue to dominate the markets. Regulatory concerns remain as legal battles and lawsuits continue between the US Securities and Exchange Commission (SEC) and companies operating in the sector. Therefore, the cryptocurrency market still has a lot to do to restore confidence.
I also find that the views that believe that once Bitcoin spot funds are launched in the United States will push prices to levels that we have never seen before are incomplete, including the comparison I saw that compared the development of the price of gold after the launch of physical gold ETFs.
While I see that this dialectic is not one-way; That is, the presence of these ETFs is not enough. Just as the price of gold rose after the launch of its funds – and this is not necessarily evidence that those funds were the ones who caused the price of gold to rise – we still see many stocks and assets from other categories continuing to decline despite the huge holdings by asset managers, whether from asset management supergiant, BlackRock and others.
Look at Zoom stock for example. Although more than 30% of the company’s shares are owned by asset managers, the stock continues to decline despite the very widespread use of the company’s products worldwide.