Bitcoin shows its biggest drop after the approval of ETFs

Bitcoin fell to the lowest level since mid-December last year after investor enthusiasm for the approval of exchange-traded funds (ETF) by the United States Securities and Exchange Commission (SEC), reported the Argentine newspaper La Nación.

After reaching a peak of US$49,000 two weeks ago, the cryptocurrency fell 17%.

At noon this Friday, bitcoin showed a drop of about 4% in the last 24 hours, standing around US$40,350. In the early morning, it reached below US$40,000.

Other cryptocurrencies that were also shown in red were like Ether, Solana and Polkadot.

A few days ago, the United States stock exchange regulator (SEC) approved for the first time the creation of exchange-traded funds (ETFs) linked to bitcoin, a decision that cryptocurrency investors were waiting with great expectation.

ETFs are investment funds that are traded on traditional stock exchanges and are indexed to the price of bitcoin. This means that investors can purchase financial products without the need to purchase the cryptocurrency itself.

Applications approved by the SEC include ETFs from the world’s largest crypto asset manager, Grayscale, traditional investment firms such as BlackRock and Fidelity, and US digital asset management companies such as Bitwise and Hashdex, among others.

“Due to the expectation of the launch of this tool and the possibility of a less harsh monetary policy by the Federal Reserve (FED), bitcoin rose 157% throughout 2023,” explains La Nación.

Now, the market is now looking at how much investor money the ETFs will attract.

“This type of correction after such a significant jump is normal for bitcoin”said Greg Mortiz, co-founder of the crypto fund AltTab Capital, to the Bloomberg news agency.