The extreme volatility in the Bitcoin market caused liquidations of more than $170 million after spot BTC ETFs went live.
The price of Bitcoin (BTC) swung wildly after the United States saw its first spot Bitcoin exchange-traded fund (ETF) launched. Following the news, BTC jumped past $49,000, a price not seen since December 2021. However, the king coin has undergone a correction and is at $46,151 as of press time, according to data from CoinMarketCap. Unfortunately, the extreme volatility led to heavy liquidations on the Bitcoin network.
In less than an hour after the correction, trading positions were liquidated to the tune of $50 million. Subsequently, data from crypto futures trading and information platform Coinglass showed liquidations increased to $120 million within four hours, and $175 million 12 hours after.
Bitcoin Liquidations Happened Despite $4B in ETF Volume Within Hours
The price of Bitcoin was reacting to spot Bitcoin ETFs finally launching to the public. According to Bloomberg ETF analyst James Seyffart, spot Bitcoin ETFs’ trading volume scaled $1.2 billion in the first 30 minutes of trading. In a post on X, Seyffart revealed that Grayscale’s ETF had the highest volume at the time, at more than $446 million, while BlackRock’s iShares Bitcoin Trust came in second at $388 million. The lowest were Franklin Templeton, WisdomTree, and Hashdex, with $2 million, $1.1 million, and $1 million, respectively. However, Seyffart clarified in a follow-up post:
“No way to know how much of this is flows. We will potentially know this evening. Though I would bet a significant portion of it is indeed flows. Would also bet that a lot of the GBTC trading volume is outflows.”
A report from The Block states that the cumulative trading volume has already crossed $4 billion, WIth Grayscale nearing $2 billion and BlackRock at $942 million.
The approval of spot Bitcoin ETFs is expected to be bullish for the world’s largest digital asset in the long term. Most predictions on Bitcoin are optimistic about the effects of spot ETF products and inflows into the market. For instance, ARK Invest’s Cathie Wood predicts that the Bitcoin market will receive $4 billion in fund inflows. While she did not add a timeframe, her prediction is based on the expected influence of institutional investors gaining exposure to Bitcoin via a spot ETF.
Despite the approval of spot Bitcoin ETFs, Wood had a few words for SEC Chair Gary Gensler. Even though Gensler was one of three Commissioners that voted in favor of the approval, the Chair’s statement reads:
“While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin. Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.”
The above statement did not sit well with Wood, who aired her opinion on a Bloomberg Radio interview. According to Wood, Gensler’s comment “denigrated the whole crypto space.” She added that “this is par for the course in disruptive innovation.”