In the ever-volatile world of cryptocurrency, futures traders who bet on higher prices are feeling the sting of a $217 million liquidation in the past 24 hours. The approval of spot bitcoin (BTC) exchange-traded funds (ETFs) has become a “sell-the-news” event, creating a contrarian bet that shows no signs of slowing.
The market’s uncertainty is further fueled by concerns surrounding crypto fund manager Grayscale. Reports indicate that Grayscale may be selling some of its bitcoin holdings as investors withdraw money from the Grayscale Bitcoin Trust (GBTC). Verified wallets linked to Grayscale, monitored by analysis firm Arkham, reveal that the fund moved over $400 million worth of bitcoin to Coinbase Prime on Thursday, raising speculation about a potential future sale. Bloomberg Intelligence analyst Eric Balchunas noted that GBTC shares flipped to a 0.9% discount against their net asset value on Thursday, likely a result of selling pressure.
Despite the outflows from GBTC, newly approved bitcoin ETFs are experiencing net inflows. BlackRock’s IBIT achieved a significant milestone, crossing $1 billion in assets under management on Wednesday.
Bitcoin’s price dipped below $42,000 late Thursday, marking a 3.7% decline since Thursday and a 15% retreat from the December high of $49,000. The broader market followed suit, with Ether (ETH) falling 2.5%, Solana’s SOL dropping 6.5%, and Cardano’s ADA declining by 5%.
In a surprising twist, BNB Chain’s BNB outperformed the market, rising by 0.6%. This boost was attributed to launchpads on the closely related Binance exchange, where users can stake BNB to gain allocations of new projects listed on the platform.
The sharp price drop led to significant losses for highly leveraged futures traders, with $217 million in liquidations, including $88 million in liquidations for bitcoin trades alone. Liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin.
As the crypto market navigates these turbulent waters, some traders predict a range-bound market in the short term, highlighting the ongoing uncertainty and challenges facing the cryptocurrency space.
