Bitcoin drops 15% in 2 weeks

Bitcoin has experienced a 15% decline in value over the last two weeks, with certain investors capitalizing on the highly anticipated launch of bitcoin exchange-traded funds earlier this month to secure profits and divest from their positions in the volatile cryptocurrency.

On Tuesday, the price of bitcoin experienced a decline of up to 3%, dropping below $39,000 for the first time since early December, before showing a slight recovery in afternoon trading.

The recent declines have reversed a portion of the substantial rally observed late last year. This surge was fueled by fervent speculation that the introduction of mainstream stock market funds tracking the world's leading crypto token would attract new investors to bitcoin.

However, the inflows into the ETFs, many of which were initiated by major Wall Street players like BlackRock, have been disappointing, leaving investors who purchased them with significant losses.

The 10 funds, launched on January 11 and sanctioned by the US Securities and Exchange Commission, had amassed a collective sum of $4.7 billion by Tuesday's conclusion, according to reports from the crypto investment group CoinShares. On the launch day of the ETFs, Bitcoin was valued at $46,100 but has since witnessed a consistent downturn.

Simultaneously, $3.4 billion has exited Grayscale's fund, the world's largest bitcoin investment vehicle, since its conversion to an ETF coinciding with the new launches.

Analysts believe that a significant portion of the funds in the 10 new ETFs likely originated from investors leaving Grayscale, which imposes substantially higher fees compared to its competitors.

The transformation of Grayscale's decade-old bitcoin trust has enabled certain investors, who previously could only sell shares in the trust at a considerable discount to the bitcoin price, to completely divest from their holdings. The fund's total size has contracted from $28 billion earlier this month to $22 billion by the close of trading on Monday.

Grayscale reduced its management fee from 2% to 1.5% in preparation for launching its ETF. However, this rate still remains significantly higher compared to its competitors.

In contrast, BlackRock charges a mere 0.12%. Nevertheless, this figure is expected to increase to 0.25% in the next year if its ETF attracts $5 billion in assets under management. So far, the US group has garnered $1.7 billion.

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