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Bitcoin in January: ETF Approvals, Price Fluctuations

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Ibrahim Anifowoshe is a crypto writer and journalist with over half a decade of experience working in the space. He studied law at the University of Lagos.  Ibrahim has written for companies like NewsBTC, Bitcoinist, Gate.io, and Exodus. He is most interested in writing about NFTs, DeFi, and how the metaverse shapes our world. Ibrahim is a writer by day, and a lawyer by night. 
By Ibrahim Anifowoshe
author
Ibrahim Anifowoshe is a crypto writer and journalist with over half a decade of experience working in the space. He studied law at the University of Lagos.  Ibrahim has written for companies like NewsBTC, Bitcoinist, Gate.io, and Exodus. He is most interested in writing about NFTs, DeFi, and how the metaverse shapes our world. Ibrahim is a writer by day, and a lawyer by night. 
on January 31, 2024 | 3 min
Updated on Jan 31, 2024
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In January, Bitcoin swung between $38,000 and $49,000 as the price stumbled on diary dates that included the approval of spot Bitcoin ETFs and a bullish market that barely sent the price beyond resistance levels.

 

While the market scampered for the gains that came from the US Securities and Exchange Commission’s (SEC) batch approval of 11 spot Bitcoin ETFs, the historic decision only sent the price clambering to a minute gain far below market analysts’ expectations.

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ETF Approval Comes 10 Years After First Filing

As widely anticipated, the SEC approved the spot Bitcoin ETFs that had been pending since last year. The historic move saw approval for asset managers like BlackRock, Grayscale, Bitwise, Fidelity, and Franklin Templeton.

 

The regulator’s approval comes 10 years after the Winklevoss twins filed for the first Bitcoin ETF, which was followed by a string of rejections from the SEC.

 

With the approval, in January, the Bitcoin price was expected to surge. And it did. To $49,000, which was followed by snap losses of 20%. At the time of writing, Bitcoin was trading at around $42,000.

 

Since the launch, inflow volumes into the investment vehicle have tanked. The significant investors’ anticipation that was seen before the approval is also declining according to on-chain data.

 

Data from The Block indicates that nine ETFs attracted an estimated $245 million in inflows on January 24. However, outflows from Grayscale Investments spot Bitcoin ETF had a net withdrawal of approximately $403 million on the same day. This was the third day in a row that the investment vehicle witnessed net outflows.

bitcoin ETF volume
The total netflow metric also hit its lowest value on January 24th, reaching -$158 million. This was a considerable fall from the high of $477 million recorded just a week earlier. The numbers show that the daily trading volume of spot Bitcoin ETFs went down from an average of $2.5 billion two weeks ago to about $1.3 billion last week.
CUMULATIVE VOLUME

“The outflows in Grayscale last week totaled $2.2 billion, although data suggests outflows are beginning to subside as the daily total continued to reduce over the week,” a CoinShares report said.

 

This represents a slowdown in interest from investors in the Traded funds. Despite this, the total trading volume has now surpassed $25 billion.

 

Before launch, it was expected that the ETFs would usher in a new era for Bitcoin investors and also create a channel for mass adoption. However, the price of Bitcoin has yet to get a significant uptick from the approvals. However, it’s still too early to call.

Price Fluctuations Haven’t Stopped Whales

Even though, in January, Bitcoin’s price fell to an abysmal $38,000, wallets holding over 1,000 BTC have added an estimated 76,000 BTC or $3 billion to their stash since the start of the year.

 

This data suggests that Bitcoin whales capitalized on the fall in the price of the pioneer crypto and bought the bloodbath. Addresses holding more than 1,000 BTC are now at an all-time high.

 

The general trend of BTC holders also suggests mixed sentiment in the crypto market. For example, accounts holding 0-0.001 BTC increased by 1.02% while those holding 0.001-0.01 BTC and 0.01-1.1 BTC saw a decrease of 1.9% and 1.36% respectively over the last 30 days. 

FOMC Meeting May Hold Rates Steady

With the price fluctuations that have followed the SEC approvals, the last week of January is expected to see the Federal Reserve meet for its Federal Open Market Committee (FOMC) on January 31.

 

Jerome Powell’s regime has generally yielded few surprises. US inflation rates have been on par with expectations and the Fed’s hopes, so it’s expected that the Fed will favor the start of rates at the next meeting in March.

 

In addition, data from CME Group’s FedWatch Tool pins the probability of rates staying the same after the January 31 meeting at almost 98%.

CME

Markets are hopeful that the market will see a cooling in macro data prints in the next few months. This will help Bitcoin maintain a price trajectory that may only be qualified with low volatility. However, should banking turbulence return to the US in the coming months, Bitcoin may see a retreat close to $30,000.

Will February See a Recovery by Bitcoin?

The launch of Bitcoin ETFs in the US earlier this month is no doubt a historic milestone for the crypto market. It’s expected that more countries will begin to open their doors to ETF applications. Hong Kong SEC has received its first spot Bitcoin ETF application.

 

However, the drop to $38,000 was an underwhelming response to selling pressure in the market.

 

 Notwithstanding, February has historically been a consistent green for Bitcoin since 2020.

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About Ibrahim Anifowoshe
Ibrahim Anifowoshe is a crypto writer and journalist with over half a decade of experience working in the space. He studied law at the University of Lagos.  Ibrahim has written for companies like NewsBTC, Bitcoinist, Gate.io, and Exodus. He is most interested in writing about NFTs, DeFi, and how the metaverse shapes our world. Ibrahim is a writer by day, and a lawyer by night. 
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