Why Is Bitcoin (BTC) Price Down 15% Since the ETF Approvals? ChatGPT Rival Weighs in
Among the reason listed by Perplexity is the potential profit-taking by some investors.
Perhaps the most important development in terms of global validation for BTC in its 15-year-long history came last week when the US Securities and Exchange Commission finally greenlighted nearly a dozen spot Bitcoin ETFs to be traded on financial markets.
These approvals were long-anticipated by the crypto community, as well as traditional investors, but they turned out to be a sell-the-news event, after which the price of the underlying asset slumped by 15% in a week or so.
Why Is That?
Various experts speculated ahead of the approvals whether they had already been priced in as BTC had soared from around $30,000 to approximately $45,000 in the months leading to them. Those who believed Bitcoin would drop immediately after the ETFs launched on US markets were disappointed at first as the asset flew to over $49,000 last Thursday.
However, the situation quickly changed as it dumped by three grand by the end of the US trading day and a further $4,500 on Friday. Since then, BTC has been unable to recover a bigger portion of its losses and currently struggles below $42,000.
According to Perplexity – a popular ChatGPT rival – one of the reasons behind these declines is profit-taking by investors who had anticipated a run-up ahead of the ETF approvals and decided to cash out a portion of their holdings.
Other possible reasons include “market expectations may not have immediately met reality, as some investors may have overestimated the immediate impact of the ETF approvals” and the confusion regarding the ETF’s nature, such as how creation and redemption work.
“Furthermore, the increased market volatility following the approvals and the liquidation of leveraged positions could have impacted the price of Bitcoin,” – Perplexity concluded.
There’s Some Good News
Although analysts were divided in their opinion about the immediate impact on BTC’s price upon the SEC approving the ETFs, most are certain that the long-term effects on the cryptocurrency’s price will be quite positive. Early research shows that over $1 billion has flown into the 11 ETFs in total, meaning that the interest is quite high.
The popular AI chatbot gave a similar opinion, saying that BTC’s price could indeed reverse its recent trajectory, especially given the upcoming halving, which should take place in April.
“Despite these short-term fluctuations, some analysts and investors still anticipate significant upward movements in Bitcoin’s price over time, driven by the approval of ETFs and other developments in the crypto world.”
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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