Futures bets on rising cryptocurrency prices have seen around $217 million liquidated in the past 24 hours as recently approved spot bitcoin (BTC) Exchange Traded Funds (ETFs) continued to be a “sell-the- news”, a bet against the current. which shows no signs of slowing down.
Fears that cryptocurrency fund Grayscale will sell its bitcoin holdings, as part of its holders selling shares of the GBTC ETF, contributed to Prirly’s decline. Verified wallets belonging to Grayscale, tracked and labeled by analytics firm Arkham shows the fund transferred more than $400 million in BTC to custodian Coinbase Prime on Thursday, likely in preparation for an eventual sale.
Analysts also pointed out that GBTC shares fell 0.9% on Thursday amid “likely selling pressure.”
However, how BlackRock’s IBIT surpassed $1 billion in assets under management (AUM) on Wednesday, with other ETFs likely to absorb most of these sales.
Bitcoin fell below $42,000 late Thursday, down 3.7% from Thursday and 15% from its December run to $49,000. This led to a pullback for the entire market, with ether (ETH) down 2.5%, Solana’s SOL down 6.5%, and Cardano’s ADA down 5%.
BNB Chain’s BNB outperformed the market and rose 0.6%, supported by launchpads on the closely related exchange Binance, where users can stake BNB to get an allocation of new projects listed on the platform.
The price decline caused losses of $217 million in highly leveraged futures bets on higher prices, with liquidation trades alone accounting for $88 million.
Liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader fails to meet the margin requirements for a leveraged position (does not have sufficient funds to keep the trade open).
Meanwhile, some traders said in a note on Friday that they expect broader cryptocurrency markets to be range-bound in the near term.
“BTC is above the $40,000-42,000 zone, which will likely act as short-term support,” said Rachel Lin, CEO and co-founder of Singapore-based SynFutures, in an email. “Overall, this past week can be summed up as the calm after the storm. The ETF mania phase is over and the market is moving sideways, looking for the next trigger.”
