Experts Unveil Key Factors Behind Bitcoin Price Plunge; To What Extent Can BTC Value Decline?

After experiencing a nearly 7% drop below $44,000, economist Peter Schiff expressed doubts about the future of Grayscale’s Bitcoin Trust (GBTC). Schiff questioned whether GBTC would be able to effectively market itself amid declining Bitcoin prices. These concerns come at a time when rival Bitcoin ETFs with lower fees are gaining popularity, leading to fears of GBTC shareholders abandoning ship. Here is what this all means for you.

Schiff’s criticisms of GBTC and the growing competition from ETFs were shared in a series of posts on social media. He specifically addressed the recent sell-off in Bitcoin, Bitcoin ETFs, and related equities. Schiff criticized investors who were speculating on the approval of spot Bitcoin ETFs, suggesting that they were now selling off their shares. He also pointed out that spot Bitcoin ETFs may struggle to convert Bitcoin into US dollars due to their reliance on Tether for liquidity and price stability.

The launch of spot Bitcoin ETFs by Bitwise Invest, Fidelity, and BlackRock in the US has attracted $625.8 million in net inflows. Meanwhile, Grayscale’s Bitcoin Trust has lost $95 million, raising concerns about investor preferences and GBTC’s high fees. The transfer of a large amount of Bitcoin from GBTC to a Coinbase Prime deposit address indicates that investor assets may be shifting to other ETFs or being sold off altogether.

On the other hand, despite Bitcoin experiencing an 8% dip to $42,500 after the approval of ETFs, some market analysts consider the launch a failure. Anthony Scaramucci, founder of SkyBridge Capital, attributes the decline in Bitcoin to significant selling of GBTC shares. In an interview with Bloomberg Television, Scaramucci highlighted a trend of Grayscale shareholders converting their shares from the trust to an ETF format. The recent approval of ETFs by the SEC has led many investors to switch to these lower-fee alternatives, resulting in sell-offs to cut losses.

However, it’s worth noting that Grayscale Bitcoin Trust, established in 2013, achieved a record first-day turnover of $2.3 billion on Thursday, marking a significant milestone for ETFs. Despite this success, shareholders of the trust have sought out cheaper alternatives, causing Bitcoin prices to drop below $43,000 on Friday. GBTC shares fell 5.2% to $38.58 on Friday, in contrast to Bitcoin’s impressive 160% rise over the past year.

Scaramucci also attributes the selling pressure on Bitcoin to the role of FTX, a cryptocurrency exchange. He claims that the bankruptcy estate of FTX is liquidating large amounts of crypto assets, which is contributing to the decline in cryptocurrency prices. Coupled with the approval of Bitcoin ETFs, this selling pressure has intensified. Scaramucci expects the selling by FTX’s bankruptcy estate to taper off within six to eight trading days, alleviating some of the oversupply in the market.

Additionally, Scaramucci mentions an upcoming development in ETF marketing on Wall Street. After eight days of silence, it is expected that Wall Street will actively promote and market Bitcoin ETFs. This could potentially shift the market dynamics and influence the direction of Bitcoin in the coming weeks as it continues its volatile journey.

In summary, the doubts expressed by Peter Schiff and the rise of rival Bitcoin ETFs have put Grayscale’s Bitcoin Trust in a precarious position. The shifting preferences of investors and the lower fees offered by ETFs have prompted concerns about GBTC shareholder abandonment. The involvement of FTX and the upcoming marketing efforts by Wall Street further complicate the situation. As Bitcoin continues its rollercoaster ride, these factors will undoubtedly shape its trajectory in the near future.