GR Exclusive: Spike Or Dip, How Bitcoin ETFs Impact Will Unfold On Bitcoin? WazirX's Rajagopal Menon Explains

It's been nearly 20 days since the much-anticipated Bitcoin ETFs hit the trading floors. ETFs are seen as the next big game in the cryptocurrency market. Bitcoin ETFs stepped into the market with a lot of excitement and mixed performance. What's eye-bulging is that the leader of the cryptocurrency, that one digital coin that swooped investors off their feet to become a darling once upon a time and continues to be the largest, Bitcoin has seen quite a correction since Bitcoin ETFs launch. It makes you wonder, what exactly is the potential of Bitcoin ETF in the market going forward?

On the launch date of Bitcoin ETF on January 10, 2024, Bitcoin's market cap zoomed to nearly $913.7 billion. Right after the launch, Bitcoin skyrocketed to as much as $48,969.37 on January 11 with the market cap crossing over $908 billion. That was some enthusiastic uproar of bulls. However, the glorious upside did not last for long. Bitcoin soon slipped $38,521.89 with a market cap near $785.81 billion, as per CoinMarketCap data.

Currently, Bitcoin trades between $41,800 to $43,400, but its market price is still lower than the levels on January 10, and January 11. The market cap is nearly $850 billion, also lower. Experts are observing the impact of Bitcoin ETFs on the leader cryptocurrency.

Many questions arise, is Bitcoin ETF a saviour in shiny digital armour or just a false dawn in the volatile life of Bitcoin? The ETF's arrival was supposed to be a watershed moment-did it live up to the hype? Rajagopal Menon, Vice President, WazirX in an exclusive with GoodReturns.In has shed some light on this.

Menon said, "What we've seen is a bit of that old familiar dance: a spike, a dip, and a whole lot of drama. Bitcoin touched the dizzying heights of $49,000 only to take a nosedive, flirting with a 20% drawdown. To the newbies in the crypto realm, welcome to the volatility vortex."

However, Menon also suggested taking a step back and not getting carried away by the fear-mongering. He added, "Bitcoin's recent descent is a drop in the ocean when you pan out to the grand scheme of things. We are back to levels not seen since, oh, a whopping seven weeks ago. Hardly the stuff of nightmares, but it sure does give the Bitcoin newbies a whirl on the volatility merry-go-round."

Explaining the selloffs, Menon said, the plot thickens with the GBTC saga. The freshly minted ETF, borne out of the Grayscale Bitcoin Trust, has been under the hammer. The culprit? None other than the FTX estate, which has been offloading GBTC shares like there's no tomorrow. A billion dollars worth of it has been sold, wiping their slate clean. A staggering 192,000 Bitcoin equivalent was offloaded by the FTX estate. Added to that, a lot of older investors are cashing in. GBTC's notorious 2% fee has taken a trim down to 1.5%, but even that's a hefty tag when you stack it up against the new kids on the block-those sleek, cost-efficient ETFs like BlackRock, flaunting a modest 0.25% fee.

He added, despite the GBTC exodus, don't let your spirits flag just yet. The crypto pundits are peering into their crystal balls, seeing signs of a bottoming out with Bitcoin reclaiming the $40K turf. BlackRock's and Fidelity's swift sweep-up of 44,000 and 40,000 Bitcoins, respectively, in a blink-and-miss-it eight days, is nothing short of impressive. The ETFs, not content with the Grayscale leftovers, have gobbled up an extra 21,100 Bitcoins, hoovering up supply at a rate that would make Dyson blush.

The money flow's a telling tale! As per Menon, GBTC might be seeing red, but the broader ETF scene is basking in the glow of a billion-dollar net positive influx. The Grayscale giant has shed a sixth of its weight in a mere eight days-a sign that the Bitcoin appetite remains voracious, despite the fear, uncertainty, and doubt (FUD) that's become the daily bread of the crypto space.

Menon believes the ETFs are just warming up! He explained let's talk about that graphic that's worth a thousand words-showing the ETFs chomping through Bitcoin like it's going out of fashion. If the miners are churning out 27,000 Bitcoins a month now, just wait till we hit the 880-day mark. That number's halving, but the ETFs? They're just warming up.

"Sure, the market's got the jitters over a 12% dip. "We're doomed," the doomsayers cry, but when you stack it up against the ghosts of Bitcoin's past, this is child's play. Remember the days when a 50% plunge was just another Tuesday? Or when a 25% correction was as common as a meme tweet? Those were the days, eh?" he said.

Then there's the impact of ETFs on digital assets. Menon said, "We've seen a 'buy the rumour, sell the news' scenario play out, but since then, it's been nothing but green. Mid-October marked the start of a rally, heavily fuelled by the ETF narrative-something many never saw coming. Bitcoin's market cap puffing up by 70% since BlackRock entered the ETF ring is a testament to that."

So, was the Bitcoin ETF a flop? Far from it. It's been a catalyst, a disruptor, and a spotlight-stealer. It's given the crypto markets a good shake, rattling the sceptics and fuelling the believers. The ETFs are not just about tracking the price of Bitcoin; they're a symbol of acceptance, a bridge to institutional money, and a sign that Bitcoin is ready to don the big boy pants. Strap in, folks; the crypto ride is only getting started, Menon lastly said.

Disclaimer: The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.