Bitcoin price falls 15% following launch of ETFs

https://www.ft.com/content/99e406f0-c5af-4a67-9937-afb1ea885565

by JumpCrisscross • 2 years ago

21 57 2 years ago

ft.com

Finnucane3• 2 years ago

ETFs make it easier for people to put money into bitcoins. Why anybody should actually want to, still not clear.

barbazoo• 2 years ago

Same reason maybe people buy gold?

dmitrygr• 2 years ago

Gold has a limited supply and has an industrial use, where it is irreplaceable, creating a floor to its price. Bitcoin has no use where it is irreplaceable and thus has no price floor. They are incomparable.

_ZeD_• 2 years ago

do they do bitcoin necklaces??

Finnucane3• 2 years ago

Because they are manufacturing high-end audio cables?

prasadjoglekar• 2 years ago

It'll also make it easier to short this asset class.

alwillis4• 2 years ago

Why anybody should actually want to, still not clear.

Including the recent drop, if you bought bitcoin a year ago, you'd be up 71.77%; the 5-year return is 995.26%.

antiframe• 2 years ago

Yes but that is in the past. Why would someone want to put money in today is a more relevant discussion.

symfoniq2• 2 years ago

This isn’t actionable, though.

If I’d bought Beanie Babies or Stanley Cups at a very particular point in time, I might be up 1,000% at another very particular point in time.

If I’d bought Bitcoin in 2021, I might still be down almost 50%.

None of this answers the question “Why would I want to buy Bitcoin?”

paulpauper8• 2 years ago

ummm what about 2022

2023 gains already being erased fast after such a huge loss in 2022.

Including the recent drop, if you bought bitcoin a year ago, you'd be up 71.77%; the 5-year return is 995.26%.

BTC post 2017 returns are worse than QQQ including dividends.

Finnucane3• 2 years ago

yes, I could cherry-pick data to make any investment look good too.

paulpauper8• 2 years ago

it has always been generally easy to buy bitcoin. this is not 2012. Any American who can open up a brokerage account can also open a Coinbase account. Or Robinhood. Or BITO. Tons of ways to do it.

Althuns• 2 years ago

Looks like the drop was due to folks taking the opportunity to unload. Is this a temporary movement due to a number of reactionaries or will it sustain?

mouzogu• 2 years ago

it won't sustain.

it's the ftx bankruptcy selling into liquidity and a cyclical kind of sell the news local top.

alwillis4• 2 years ago

In the big picture view of bitcoin, a 15% drop in the price is meaningless. Even with the drop, the 5-year return for bitcoin is 995%.

paulpauper8• 2 years ago

someone could have said the same about Enron's initial 15% drop in 2001. Stock indexes have a century-long history of recovering. Bitcoin? a decade.

paulpauper8• 2 years ago

It is worse than that. It is due to Grayscale mass liquidations, which few people apparently saw coming. The unlocking of liquidity backfired on longs due to liquidation of GBTC. This is another example of how speculators and investors tend to get blindsided. You think you understand the risks but you don't. You understand the risks you know, not the unknown ones that only manifest when too late.

The concern now is grayscale will keep dumping , so people are selling into this fear, creating additional selling on top of the Grayscale selling in anticipation of more Grayscale selling.

mrb5• 2 years ago

This -15% fall was sort of expected as the ETFs were already priced in, which is why Bitcion went up before their launch. Now Bitcoin is back to $39k, which is early Dec 2023 levels, ie. back when the market thought ETF being approved were unlikely. In other words, this price move is a non-news.

Also, it's always good too look at the big picture: https://bitcoin.zorinaq.com/price/ And, yes, a log-chart is the only proper way to look at an asset that gains/loses orders of magnitudes over the years.

paulpauper8• 2 years ago

What was unexpected was Grayscale + FTX taking a major dump on the market. The assumption was some speculators who bought in anticipation of the approval would take profits, not that the biggest holder of Bitcoin would undergo major liquidation. The people who bought the GBTC trust at a discount want to exit.

andrewla4• 2 years ago

Clichéd, I know, but this is good for Bitcoin.

For the first time, people have the ability to express short interest in Bitcoin. Sure, there are sketchy credit markets inside of the various cryptocurrency exchanges, but soooo sketchy. The biggest was FTX, for example.

But now organizations and individuals can actually express short interest in Bitcoin. Ideally the ETFs would be redeemable in kind, rather than the cash-settled ones that are all that the SEC will allow, so there may be disconnects to the spot price, but this is very exciting for long-time Bitcoin believers like myself (as opposed to hodlers) because price stability is the goal.

bb883• 2 years ago

Shorting a stock often helps get it to the "correct" market price faster. If the market truly thinks that BTC is really propped up by Tether, then well, downward price pressure should help the market price the true value of BTC.

I do believe the true price is Zero, like most crypto currency has gone to over time.

andrewla4• 2 years ago

Exactly! Price discovery in Bitcoin has always been a nightmare, but now there's at least a chance of getting some serious information into the market.

lxgr4• 2 years ago

How can there ever be price stability without any mechanism to buffer changes in economic activity?

The demand for money is highly variable and roughly correlated with economic activity (just think of 2020!), so with the supply fixed, large swings will always occur even (and especially) in a world where Bitcoin really becomes a usable currency.

andrewla4• 2 years ago

I think that's an interesting question. Long term I feel that there is an arbitrage between Bitcoin prices / block reward and energy prices.

You may be right about big swings as demand for money fluctuates, but we need functioning credit markets in Bitcoin for that to even be an option. This is still very far in the future.

paulpauper8• 2 years ago

it has always been easy to short crypto. Futures, for example.

andrewla4• 2 years ago

Bitcoin futures on CME are not really accessible to retail investors, and the market there has always suffered from tepid liquidity as a result.

mrb5• 2 years ago

It's been possible for years to short Bitcoin on reputable exchanges. For example Coinbase and Gemini, to name two of the most regulated and compliant US-based exchanges... unlike FTX which was not in the same category, and definitely sketchy. What the ETFs do is not so much help bears place their bets. The ETFs simply make the asset more accessible, to a broader pool of traders, who now don't have to sign up to crypto exchanges, but can trade from their usual brokerage firm.

fsadfs23asdf• 2 years ago

First, you held bitcoin in a wallet. You couldn't buy anything with it but at least having it was cool.

Second, you could give your bitcoin to a third party with a website that said you really had that much bitcoin. You forwent the promises of security, and you still couldn't buy anything with it, but at least you could now speculate in it.

Now, you can hold your claim to bitcoin buy buying a fund that owns the bitcoin.

The very existence of the ETFs and their enormous value show how far we are from the original idealisim into wherever we're at now. And... you still can't buy anything with bitcoin.

reidjs• 2 years ago

Now Bitcoin represents a store of value, not a platform for transactions like Visa, PayPal, Venmo, etc.

sho_hn• 2 years ago

I'm not sure the idealism was ever really there.

I've been in the FOSS community for 25 years, and I could see and feel an entire generation of contributors missing in action for a good long while. Legions of young folks thinking they had found the ticket to convert their nerdiness into money, status and sex. The crypto-induced brain drain from arguably more useful SW was enormous. And I saw very little of it happen for noble reasons.

Jhsto• 2 years ago

Ethereum staking (the S in PoS) is similar that Lido has around 33% share: https://dune.com/hildobby/eth2-staking

Of the nodes that have the blockchain (which there are less than 6000) 50% is cloud hosted: https://ethernodes.org/network-types

npoc2• 2 years ago

In this phase of it's life, bitcoin is proving itself as a store of value. It can't start to compete as a common medium of exchange until its value has stabilised enough to be a good unit of account. This will likely take decades and a bitcoin value over $10M/BTC

paulpauper8• 2 years ago

yup, yet again, big tech beats crypto https://greyenlightenment.com/2023/12/19/five-years-later-th...

since the start of 2024, leveraged tech ETFs have gained, and BTC has fallen a lot

There is no reason to hold BTC when , controlling for volatility , TECL & TQQQ have more upside, less risk. Speculators hoping to get rich with crypto would be better off with the 3x tech funds. Bitcoin has a recurring habit of dumping 10% in a week for no good reason, while the Nasdaq chugs along to new highs or flat. No good.

npoc2• 2 years ago

You should buy bitcoin for the long term. The people who understand bitcoin don't care about price movements over 3 weeks.

They care about price movements over 3 decades.

animex2• 2 years ago

Buy on speculation, sell on news. Welcome to the real world, BTC.

Bitcoin price falls 15% following launch of ETFs

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