Bitcoin continued to pull back from a two-year high as traders parsed results from the much ballyhooed first day of trading of exchange-traded funds holding the cryptocurrency. 

“With the first day of ETF trading behind us, it already feels like the crypto markets have moved on to looking toward the next narrative,” said Chris Newhouse, DeFi analyst at Cumberland Labs. 

The original cryptocurrency fell as much as 10 per cent to as low as US$41,469. On Thursday, Bitcoin briefly topped US$49,000 for the first time since December 2021 after the almost dozen ETFs began trading. Most other cryptocurrencies were lower, with Cardano Solana’s SOL and Avalanche declining.  

The share prices of all the Bitcoin ETFs declined on Friday (Jan 12).

Bitcoin’s decline was driven in part by sales of Grayscale Bitcoin Trust shares, according to SkyBridge Capital founder Anthony Scaramucci. 

“There seems to be of lot of selling of Grayscale,” Scaramucci said during a Bloomberg Television interview on Friday. 

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The hedge fund manager said that his trading desk noted that holders of the shares were selling to book losses and shifting to lower fee alternatives. 

Selling one Bitcoin product to buy another should not impact Bitcoin’s price, said Zach Pandl, Grayscale’s managing director or research. The potential approval of spot Bitcoin ETFs has been a topic of conversation since Grayscale’s court victory last summer. Following the sharp run-up in Bitcoin’s valuations, it’s natural to see some profit taking in the asset, he said.      

The bankruptcy estate of failed FTX crypto exchange is also “unloading” assets amid the increased market activity around the ETF announcement, resulting in very heavy selling volume for Bitcoin, Scaramucci said. 

While the complete flow data wasn’t currently available, at least US$720 million flooded into the 10 Bitcoin ETFs that began trading, Bloomberg data show. The Bitwise Bitcoin ETF (ticker BITB) led the way with nearly US$240 million in flows, followed by the Fidelity Wise Origin Bitcoin Fund (FBTC) and the iShares Bitcoin Trust (IBIT), according to data available Friday morning. 

The much-anticipated debut of the 10 spot Bitcoin ETFs saw roughly US$4.6 billion worth of shares change hands on Thursday. That was paced by the Grayscale Bitcoin Trust (GBTC) – which has existed in a trust structure since 2013 – recorded US$2.3 billion in volume, the largest-ever first-day turnover for an ETF. 

Shares of so-called crypto companies also extended losses. Bitcoin proxy MicroStrategy fell for a sixth day, while miners Marathon Digital and Riot Platforms were both down more than 10 per cent. Coinbase Global, the biggest US crypto exchange, fell 7.4 per cent. BLOOMBERG