Bitcoin ETF Hype Subsides: A Look into Market Trends

The price of Bitcoin has once again surpassed $43,000, registering a 2.2% increase in the last 24 hours, and its market capitalization is nearing $850 billion.

Despite the selling pressure affecting BTC, Bitcoin ETFs continue to attract attention and inflows. However, the initial FOMO surrounding the arrival of Bitcoin ETFs appears to be waning as the BTC price faces ongoing pressure.

There has been a notable transformation in the sentiment of crowd discussions about Bitcoin, as revealed by a recent analysis from on-chain data provider Santiment. Traditionally, a high level of crowd discussions on Bitcoin indicated fear, but since mid-2023, the narrative has shifted. Enthusiasm and optimism surrounding Bitcoin ETFs have turned high Bitcoin discussions into a greed indicator, driven by unrealistic expectations following ETF approvals.

🥳 Historically, a high ratio of crowd discussions toward #Bitcoin is a sign of fear. However, since mid-2023, the euphoria & optimism surrounding the #ETF's has flipped high $BTC discussions into a greed indicator due to (arguably) unrealistic expectations for

(Cont) 👇 pic.twitter.com/CVf9nm1r04

— Santiment (@santimentfeed) February 2, 2024

After the SEC’s approval of Bitcoin ETFs three weeks ago, Santiment observes a normalization of this sentiment indicator. However, a potential risk is highlighted in the analysis: if discussions about altcoins surpass those about Bitcoin in the first week of February, it could push the Bitcoin discussion ratio into a bearish “unhealthy” zone.

Despite recent declines, Bitcoin ETFs continue to attract significant trading volume, with $ARKB leading in volume, closely followed by $FBTC. Notably, the Grayscale Bitcoin Trust GBTC has experienced a decline in volume, while others have seen an increase.

In the realm of Bitcoin options, data from Greeks.Live reveals that nearly 22,000 BTC options are set to expire on February 2, with a Put Call Ratio of 0.66. The Maxpain point is identified at $42,000, holding a substantial notional value of $960 million, adding significance to the impending options expiry.

Throughout the week, the cryptocurrency market has demonstrated relative stability, with both Realized Volatility (RV) and Implied Volatility (IV) experiencing downward trends for major terms. Noteworthy is the injection of incremental capital into the crypto market through Bitcoin spot ETFs, signaling a shift as the grayscale sell-off slows down.

In terms of block trading, there is a more subdued activity characterized by certain whales reducing their positions. This reduction is primarily attributed to profit-taking strategies associated with betting on ETF movements. Looking ahead, market enthusiasts are anticipating the next significant development, with speculation surrounding the Bitcoin halving gaining traction.

Author

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.