- Despite initial optimism following the approval of Bitcoin ETFs, the crypto experienced an unexpected decline, dropping over 7% from $49,000 to an intraday low of $45,644.
- In contrast to the Bitcoin ETF approval, the market continues to exhibit uncertainty, with the Bitcoin options data showing 36,000 BTC options nearing expiration.
The hype surrounding the Bitcoin ETF approval quickly faded away as the BTC price tanked by more than 7% from over $49,000 to an intraday low of $45,644 on Thursday, January 11. As of press time, Bitcoin is 0.5% down at a price of $45,903 with a market cap of just under $900 billion.
The unexpected decline contradicts the prevailing optimism in the market following the recent approval of Bitcoin exchange-traded funds (ETFs).
Furthermore, the Bitcoin options data also paints a picture of uncertainty in the market. Greeks.Live has shared options data for January 12, revealing that 36,000 BTC options are on the verge of expiration. The data includes a Put Call Ratio of 0.9, a Maxpain point of $45,000, and a notional value of $1.68 billion.
Despite the expected passage of the Bitcoin Spot ETF this week, the market experienced frequent and sharp volatility fueled by repeated fake news and breaking news. As mentioned earlier in the week, adopting a LONG GAMMA strategy is anticipated to be cost-effective.
Before the ETF approval, short-term implied volatilities (IVs) reached their peak, but all major term IVs subsequently receded due to lower-than-expected market volatility. While the adoption of the Bitcoin Spot ETF is projected to bring incremental capital to the crypto market in the long term, the short term remains uncertain, with various factors influencing the market. Sharp volatility, similar to this week’s fluctuations, could persist for several days.
Spot Bitcoin ETFs See Massive Trading Volumes
In a notable debut, nearly a dozen Bitcoin ETF funds, including offerings from major players such as BlackRock Inc. and Fidelity Investments, experienced a robust start with approximately $4.6 billion in shares exchanged during an energetic inaugural trading day. This significant activity is viewed by industry supporters as a crucial step toward broader mainstream adoption among everyday investors and a potential catalyst for further market gains.
Bloomberg ETF strategist Eric Balchunas reported that a total of 700,000 individual trades were executed in and out of the 11 spot ETFs on the first day. To provide context, this volume is twice the number of trades observed for $QQQ, although the latter see more substantial dollar volume due to the participation of larger investors. The higher number of grassroots actions, as opposed to substantial seed buys, exceeded expectations and is considered a positive development for the market.
All told there were 700,000 individual trades today in and out of the 11 spot ETFs. For context, that is double the number of trades for $QQQ (altho it sees much bigger $ volume bc bigger fish use it) So a lot more grassroots action (vs big seed buys) than I expected which is… pic.twitter.com/syUGfjHQpr
— Eric Balchunas (@EricBalchunas) January 11, 2024
He further added: “Easily the biggest splash in ETF history for a first day. No matter where you look, it’s superseded expectations.”
On its inaugural day, Grayscale, a prominent participant in the crypto asset management sector, has taken a prominent position, as its transformed ETF registered an impressive $1.9 billion in trades. Following closely are BlackRock and Fidelity, with trade volumes reaching $942 million and $628 million, respectively. These substantial figures underscore a notable investor interest, especially in the recently introduced funds from BlackRock and Fidelity, indicating a significant injection of capital into these offerings.
While the US Bitcoin ETF now become a reality, everyone is now awaiting the launch of the spot Ethereum ETF that shall come sometime around May 2024.
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