By James Davis
Bitcoin has continued its downtrend today, dropping below $39,000 as the crypto markets feel the effects of the post-ETF approval selloffs. The largest coin by market capitalization is now valued at $38,687 after a 24-hour drop of 4.9%. It is down 9.7% over the past seven days, per data from CoinGecko.
Bitcoin’s poor performance has had a negative effect on BRC-20 tokens SATS and ORDI, which have plummeted 16.3% and 11.9% to $0.0641 and $67, respectively. The two digital currencies were inscribed on the Bitcoin blockchain via the Ordinals Protocol, which was launched last January.
What is Driving BTC’s Price Down?
So, what’s causing Bitcoin’s price to decline? Analysts believe asset manager Grayscale has contributed to the latest downtrend. On January 10th, the firm’s Bitcoin ETF, Grayscale Bitcoin Trust, had over $27.5 billion in assets under management. However, after 13 days of trading, the ETF has lost $6 billion because Grayscale has been cashing out BTC backing its ETF shares.
The selling pressure exerted by the asset manager has been bad news for the broader crypto market, whose valuation has now dropped to $1.64 trillion, a level it hasn’t touched since the beginning of this year.
Grayscale vs. SEC
Before January 10th, Grayscale engaged the United States Securities and Exchange Commission (SEC) in a legal battle with the aim of turning its Bitcoin Trust into an Exchange-Traded Fund. The firm finally achieved its goal earlier this month, which removed share lockups, allowing investors to redeem their shares for BTC.
As Grayscale Bitcoin Trust continues to witness a decline in its assets under management, other ETFs have been gaining. For example, BlackRock’s iShares Bitcoin Trust now boasts $1.3 billion in assets under management within just a few days of trading. Some ETF analysts are optimistic that the figure will hit $50 billion by the end of the year.
Market Update
Meanwhile, all leading digital currencies have posted losses over the past 24 hours. Ethereum is down 7.7% to $2,186, BNB trades at $293 following a 5.6% drop, Solana has dropped 8.1% to $80, XRP is valued at $0.5003 after a 4.9% decline, Cardano has plummeted 7.9% to $0.45, and Dogecoin is down 8.3% to $0.0763.