Experts’ fears about a possible panic sale are not confirmed. Bitcoin rebounded and the market is recovering.
Due to the sharp drop in leading cryptocurrencies, including bitcoin and Ethereum, market capitalization decreased by almost $100 billion per day, from $1.283 trillion to $1.189 trillion. At the same time, the share of bitcoin in the market (Bitcoin Dominance) remained at about 46%, while the share of ETH grew slightly from 17% to 17.4%. BTC dropped to $29K, the price of ETH was $1,700. Experts connect the market decline with the bans of the Chinese authorities on mining, as well as with the possible sale of shares of the large Grayscale Bitcoin Trust.
The Grayscale Bitcoin Trust was one of the few tools to invest in bitcoin through a brokerage account. It is not registered with the SEC, so it is only available to accredited investors. This week the Grayscale Bitcoin Trust’s shares blocking period ends, totaling $1.4 billion. If holders began to sell off their GBTC, it would cause a sharp drop in the price of the underlying asset, that is, bitcoin.
The possibility was high, because in the six months while GBTC remained blocked, several instruments appeared on the market, the same as offered by the Grayscale Bitcoin Trust. First of all, these are bitcoin ETFs, Exchange-traded funds.
Investors could either completely shift into these well-known instruments or partially diversify their portfolios. In both cases, a fall in the price of BTC was highly likely. As it turned out, the BTC price dropped only for a short period. Investors are quite happy with their GBTC shares, they are in no hurry to sell them, and some of them even buy additional shares.
In particular, the well-known investment company ARK Investment Management, founded in 2014, bought 140 thousand GBTC shares for about $3.3 million. Now ARK Investment Management has 9 million GBTC, they have been added to the ARK Next Generation Internet ETF with other technology stocks. ARK Investment Management also added 120 thousand shares of the largest US cryptocurrency exchange Coinbase.
The positive news background contributes to the price rise of both bitcoin and Ethereum. Market capitalization is also recovering. An additional driver of growth is the FOMO effect (Fear of missing out). Those investors who have been waiting for the right time to buy at the lows now fear that they have missed this moment and are now buying even more cryptocurrency than planned before.
The FOMO effect leads to a fast rise in the price of an asset, this is happening in the market now. Moreover, the price of the leading altcoin is growing even faster than the price of bitcoin, due to the upcoming London hardfork on the Ethereum network, which is scheduled for August 4th. London hardfork has already been successfully conducted on three test networks. After success on the mainnet, the price of ETH may rise above $3000.