🚨 Crypto is crashing. What’s next?

GM everyone. This is 2036. We scroll for gems all day so you don’t have to.

Here’s what we’re serving up today 🍲: Crypto markets are down after the approval of the Bitcoin ETF. What’s happening - and where do we go next?

Let’s dig in.

On January 10, the Bitcoin ETF was finally approved. This is great news that will fundamentally change the industry forever.

Every investor with a brokerage account can now buy Bitcoin, including on leverage.

But the biggest winner of the bitcoin ETF was $GBTC.

We’ve talked about GBTC before. It’s an investment trust that owns Bitcoin on behalf of investors. And for 18 months, it traded at a discount to the value of its bitcoin.

But with the approval of the Bitcoin ETFs, GBTC was converted into an ETF. This means the discount was almost entirely eliminated.

But here’s the not-so-great part: GBTC holders are selling.

After years of being locked up in an asset trading at a discount, they can finally sell their shares at par.

And it looks increasingly likely that the outflows from GBTC could be higher than the net inflows into the 12 new ETFs that were approved.

In other words, not enough money is flowing into the ETFs yet to make up for the GBTC selling spree. For now, it looks like there are more sellers than buyers.

We’ll get clarity this week as all the numbers come in. And, of course, we’ll keep you updated.

But the initial euphoria of the ETF could be calmer than most people expected.

So what's next?

If there are more outflows than inflows, it could temporarily put downward pressure on bitcoin’s price.

Ethereum is holding up well in anticipation of an Ether ETF in May. But investors who anticipated this move are also turning away from bitcoin proxies, like Microstrategy stock and miners.

This, however, doesn’t change the Bitcoin thesis for 2024 at all.

Drawdowns in Bitcoin are normal and to be expected. Bitcoin routinely crashes 30-40% in bull markets on the way to new all-time highs.

In fact, in the last bull market, bitcoin crashed -62% before making new all-time highs.

So strap your seatbelts.

These drawdowns are not fun to live. But they’re part of the game. Nothing goes up in a straight line, and volatility is the price you pay for high returns.

No one knows how low we’ll go this time.

But on the flip side, we’ll likely get some great buying opportunities soon.

For now, we’re looking closely at the bitcoin miners and Solana.

So, if you have some dry powder, this could be your final opportunity before the halving in April, the 4-yearly event that catapults crypto higher.

And if you’ve been comfortably staking $TIA, congratulations. It’s up +48% in the last week and has completely shrugged off the Bitcoin ETF news.

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1/ Crypto products see record volume but lackluster inflows

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3/ BlackRock CEO Larry Fink sees value in having an Ether ETF