Bitcoin hovers just under $40,000 as market tracks Grayscale outflows

Bitcoin BTC +1.53% 's price eclipsed $40,000 at different points on Wednesday but largely hovered just below that mark, as market watchers continued to observe the selling off of Grayscale's spot bitcoin ETF.

The price of the world's largest cryptocurrency by market capitalization was $39,672 at 4:37 p.m. ET, according to The Block's Price Page . While it's up 1.3% over the past 24 hours, bitcoin's price has declined nearly 14% over the past two weeks.

Trying to summarize why the asset has been sliding since the launch of spot bitcoin ETFs earlier this month — the price surpassed $48,000 on the first day the new products started trading — Bitwise executive Matt Hougan said on Tuesday that there has been an "expectations-led" sell-off in recent days.

"This is not strictly speaking an ETF-led sell-off. The ETFs are net buyers of Bitcoin," he said. "This is an ETF expectations-led sell-off. The market front-ran the ETF approval by piling into to both spot bitcoin and bitcoin derivatives."

ETF trading volume

So far, total trading volume for all spot bitcoin ETFs is over $20 billion, according to The Block data . Products offered by Grayscale, BlackRock and Fidelity have dominated, accounting for about 90% of the total volume.

Much of Grayscale's volume has been made up of investors selling the fund, which is a conversion of the firm's flagship GBTC fund.

Hougan believes the market expected there would be "larger net flows into ETFs than we’ve gotten so far." Now, the market is "unwinding that bet," he also said, adding that in his opinion "the market overestimated the short-term impact of ETFs."

On Wednesday afternoon, Bloomberg Intelligence senior ETF analyst Eric Balchunas posted data to X showing that Grayscale's trading volume was on pace to end the day at its lowest level since the new products began trading.

At the time of his post, Grayscale had generated about $463 million in trading volume, which was significantly lower than previous days. The first day spot bitcoin ETFs traded, Grayscale registered $2.3 billion in trading, the data also showed.

"GBTC volume down again today.. could be sign of some exhaustion in the selling," Balchunas said.