LONDON - Bitcoin has fallen over one fifth since its peak earlier this month, hit after the United States approved its first spot bitcoin exchange traded fund (ETF), as investors who had bought in expectation of the approval sold after the confirmation.

The world's largest crypto currency was last at $38,900, down 20.6% from around $49,000 - the three-year high it hit on Jan. 11 in the wake of the decision by the U.S. Securities and Exchange Commission to approve spot bitcoin ETFs.

Nearly $4 billion of funds have flowed into the new spot bitcoin ETFs, particularly to products operated by BlackRock and Fidelity, according to analysts at Deutsche Bank.

But, they said, $2.8 billion of those were accounted for by flows out of Grayscale - once a fund, now an ETF - which had previously dominated the regulated bitcoin investing market.

A further factor in bitcoin's price decline was the sale of assets from bankrupt crypto exchange FTX, Deutsche said.

Separately shares in Coinbase, the dominant U.S. crypto exchange, dipped around 4% in pre market trading on Tuesday after JPMorgan downgraded the stock to underweight from neutral, saying "the catalyst in bitcoin ETFs that has pushed the ecosystem out of its winter will disappoint market participants".

Other crypto stocks are also under pressure.

  - Reuters