CT was initially filled with FUD and “I told you so” proclamations as the Bitcoin ETF approvals proved to be a short-term “sell the news” event.

For starters, we warned of this potential outcome too.

No market goes up in a straight line — and crypto is no different. Bitcoin’s price appreciated a whopping 75% in the 3 months leading up to the launch of spot ETFs, propelling BTC into extremely overbought territory.

These types of extreme moves are almost always followed by a period of price consolidation. In fact, we’d be more worried if we didn’t see this happening right now.

We were already anticipating a period of price consolidation sometime in the early months of the year too.

“It’s possible we see another bullish price move towards $50K before hitting a local top, as this would mark a natural point for some post-ETF approval consolidation.” — Year Ahead For Markets 2024

Which is precisely what we’ve seen so far.BTC’s price did breach a key retracement level that we have been watching, briefly breaking above the 61.8% retracement level (~$48.5K) the same day the BTC ETFs went live.

We noted it was right around these retracement levels that BTC topped out in mid-2019, too. Price drawdowns of 20-30% are common during bull markets — not a major cause for concern.

Swimming Upstream Against GBTC Outflows

We’ve also seen a reshuffling of the deck since the new spot BTC ETFs launched. All of these new products have seen positive inflows so far but were initially overshadowed by the massive outflows from GBTC, which topped $4.3B in the first nine days (with total outflows now exceeding $6.2B).

Source: @JSeyff

The ETF launches created a ripe opportunity for GBTC investors who wanted out. There was a lot of pent-up selling the first couple of weeks, with much of it likely being opportunistic. The FTX estate led a lot of the early outflows, with some other institutions following suit (presumably DCG, among others).

GBTC had also outperformed spot BTC by ~40% in the 3 months leading up to the ETF launches, marking a natural selling point for those who bought GBTC in anticipation of its discount narrowing.

Remember, GBTC’s discount to NAV was ~40% back in June.

But GBTC outflows have started to slow — the last 8 trading days have all seen positive aggregate inflows for BTC ETFs.Some of that GBTC outflow may end up getting recycled back into other BTC ETFs — if it hasn’t already — but a lot of it may not. And that’s fine.

This isn’t a short-term game, and none of these high-profile institutional ETF issuers would put this much effort into launching some of the most highly contentious ETF products we’ve ever seen just to try and make a quick buck.

Having said that, capital isn’t going to flow aimlessly into these ETFs just because these shiny new products exist. Capital flows need catalysts — and price is ultimately the best catalyst of all.

Rate Cut Repositioning

The launch of these new BTC ETFs a