Bitcoin (BTC) experienced a sharp decline, tumbling to near $43,000 on Friday. This 6% drop in day-over-day trading came in the wake of the debut of several spot bitcoin exchange-traded funds (ETFs) in the U.S. The fall in Bitcoin's value, from around $46,000 earlier in the day to as low as $43,200 during the U.S. trading session, marks an 11% decrease from Thursday's two-year peak of $49,000, as per CoinDesk data.
This downward trend extended to cryptocurrency-adjacent stocks as well, with significant pullbacks noted in several companies. Bitcoin miners such as Marathon Digital (MARA) and Hut 8 (HUT) recorded declines exceeding 10%. Riot Platforms (RIOT) saw an 8% drop, and Coinbase, the crypto exchange integral to multiple spot bitcoin ETFs, experienced a 6% fall in its stock price.
The introduction of spot bitcoin ETFs was a landmark moment for the industry, offering a more accessible avenue for retail investors to engage with Bitcoin's pricing. However, Friday's price dip aligns with CryptoQuant's predictions of a "sell the news" event, forecasting Bitcoin could fall to as low as $32,000 following an ETF approval.
Historically, similar significant events in the crypto market, such as Coinbase's stock market listing and ProShares' futures-based bitcoin ETF launch, have coincided with peaks in cryptocurrency prices, hinting at potential cooling in the market.
In contrast to Bitcoin's decline, Ether (ETH) presented a different trajectory, posting an 18% gain over the week, reaching heights not seen since May 2022. This rise is attributed to investor rotation from Bitcoin to Ether, spurred by the anticipation of ETF approvals for crypto's second-largest token.
The U.S. Securities and Exchange Commission (SEC) is set to decide on spot ETH ETF applications starting in May, with firms like BlackRock, Invesco, Ark, and VanEck, as well as Grayscale's bid to convert its Ethereum Trust (ETHE) into an ETF, in contention. Notably, Ether's performance in 2023 lagged behind Bitcoin's, with a 90% increase compared to Bitcoin's 157%.
The market consensus is that Bitcoin will eventually benefit from the introduction of ETFs, though this impact might unfold gradually as newcomers acclimate to the asset class. Alex Saunders, an analyst at Citi, remarked, "Bitcoin's potential for inclusion in portfolios to take on extra prominence, though any widespread inclusion in portfolios is still some way off, in our view."
Other cryptocurrencies like Litecoin, known for its similarity to Bitcoin's vision as a medium for everyday payments, also showed resilience amidst the market downturn, aiming for a 14% weekly gain.
However, the ripple effect of Bitcoin's price drop was felt across the crypto equities sector, with companies like Coinbase and MicroStrategy seeing 5% and 7% declines, respectively. Bitcoin miners, including CleanSpark, Iris Energy, Marathon Digital, and Riot Platforms, also continued their significant losses from Thursday.
