Bitcoin Price Drops Below 41.000 US Dollars, Here's Why!

The cause of bitcoin prices is falling. (Photo; Doc. Pexels)

JAKARTA - The price of Bitcoin (BTC), the world's largest cryptocurrency, continues to weaken below US$41.000 (Rp583.6 million) this morning, in line with the downward trend that has been going on since the beginning of this month. This decline was triggered by a massive liquidation of Grayscale Bitcoin Trust (GBTC), a crypto investment product that turned into a Bitcoin spot ETF in the United States (US).

CoinGecko data shows that the price of Bitcoin has recovered slightly to around US$40,600 (Rp577.6 trillion) at the time of writing this article, but it is still down 2.7% in a day and 3.7% in the past week. The price of Bitcoin is also still far from its highest level of US$69,000 (Rp981.9 trillion) in November 2021.

One of the main factors causing the Bitcoin price decline is the exodus of investors from GBTC, an investment product offered by Grayscale, the world's largest crypto asset management company. GBTC allows investors to gain exposure to Bitcoin without having to buy or store it directly.

GBTC is trading on the secondary market at premium prices or discounts against the underlying net asset value (NAV) of Bitcoin. However, GBTC faces stiff competition from the Bitcoin spot ETF, recently approved by US regulators. Bitcoin spot ETF is an investment product that tracks the price of Bitcoin in real-time and is trading on stock exchanges.

In response to Bitcoin spot ETF approval, Grayscale announced it would turn GBTC into a Bitcoin spot ETF, allowing investors to exchange their GBTC shares with Bitcoin. However, this conversion process sparked massive liquidation of GBTC, as investors chose to take advantage of their position.

In the past week, there has been a GBTC outflow of more than 2.2 billion US dollars (Rp 31.3 trillion), according to data from Bybit. Grayscale responded by moving hundreds of millions of dollars in Bitcoin to Coinbase Global Inc's detention for liquidation.

Liquidation from GBTC adds to selling pressure on Bitcoin, which has decreased since Bitcoin spot ETF approval in the US. Although Bitcoin's spot ETF has amassed 95,000 BTC and achieved assets under management (AUM) of more than $4 billion, the market is not showing high enthusiasm, causing a 1.6% drop in Bitcoin prices in a day.

The decline in Bitcoin prices reflects the overall condition of the crypto market, which has also decreased in recent days. Global crypto market capitalization fell 2.7% to $1.68 trillion. Global crypto market capitalization initially jumped to $1.86 trillion (Rp26.4 quadrillion) the day after the SEC approved trading 11 Bitcoin spot ETFs.