After ETF Approval, Bitcoin Falls by Seven Thousand Dollars in Two Days, Ethereum Rises

The most anticipated event in the crypto industry in the past decade became a reality last week when the Securities and Exchange Commission (SEC) gave the green light to all applicants for spot bitcoin ETFs.

On Thursday, 11 such products began trading in the market, and the volume on the first trading day exceeded four billion dollars. Amid this, bitcoin faced significant volatility, including a price drop from over 49 thousand to below 42 thousand dollars.

Bitcoin surged to over 49 thousand dollars on Thursday for the first time in nearly two years, just a few hours after the ETFs went live in the U.S. markets. A few hours later, it fell by three thousand. The decline continued on Friday as the largest cryptocurrency dropped to 41,500 dollars, losing more than seven thousand dollars in just over a day.

Ahead of the ETF approval, many experts speculated whether the ETF expectations were already priced in, given that bitcoin had surged by over 150 percent in 2023. Those predicting that the ETF approval would be a classic ‘sell the news’ event were quite firm in their belief, with numerous forecasts that the price of bitcoin would fall after the ETFs were approved.

It is now clear that they were right. In fact, history shows that something similar happened in August 2023. The first European spot bitcoin ETF was launched on the Euronext Amsterdam exchange, and the price of bitcoin fell by 1,500 dollars in the first few days.

At the end of 2021, the SEC gave the green light for several futures bitcoin ETFs, and the effects were similar, with a massive price drop in the following weeks and months.

After the ETFs launched on Thursday, trading volume surged to over 4 billion dollars, and Grayscale took center stage with the largest numbers. However, this could actually be the reason for the price drop, as suggested by SkyBridge Capital founder, Anthony Scaramucci.

– It seems that most of the selling is happening through Grayscale – he said, which could be somewhat understandable, given Grayscale’s fees above the average of 1.5 percent. Just for reference, most ETF competitors offer between 0.25 and 0.4 percent.

Grayscale’s GBTC Trust came to light more than a decade ago and became the largest bitcoin fund with assets under management of over 28 billion dollars. It was converted into a spot bitcoin ETF, along with other approvals, and actually recorded the highest turnover on the opening day with a volume of 2.3 billion dollars.

Another Crypto ETF?

Bitcoin has recovered some of its losses and remained in a tighter range of around 43 thousand dollars over the last two days. Despite this, it is down by more than two percent on a weekly basis, meaning that the market capitalization has fallen to 840 billion dollars.

Bitcoin’s dominance over altcoins has decreased to below 50 percent. The metric has fallen by more than three percent in the last week, while it was well above 53 percent.

While bitcoin fell in the week when all ETFs were approved, ethereum went in the opposite direction, perhaps fueled by predictions that a spot ethereum ETF will be approved by the end of May, when VanEck’s application is due for SEC approval. Ethereum has risen by more than 13 percent on a weekly basis and is currently trading above 2,500 dollars.

The certainty of approval has certainly been bolstered by Larry Fink’s statement that he sees value in the existence of a spot ethereum ETF. History clearly shows that BlackRock does not lose, and it can be confidently asserted that the traditional financial sector will receive another crypto ETF in May.

Additionally, the closely watched ethereum to bitcoin ratio (ETH/BTC ratio) appears to have recorded a bottom from which it has risen nearly 30 percent. This increase indicates a heightened appetite for taking on greater risk among crypto investors and a greater focus on the altcoin market.

As hopes and the likelihood of spot ethereum ETF approvals grow towards the end of May, many analysts are now pointing out that ethereum will take center stage, and that the price, as in the case of bitcoin months before the ETF approvals, will rise. Predictions are mostly based on above three thousand dollars.