The recent price drop of Bitcoin (BTC), which is now trading below the critical $40,000 mark, has once again shaken the crypto world. The hope was that after the approval of the long-awaited spot ETFs, the price of the king of cryptocurrencies would regain momentum. Instead, the endorsement appears to be a classic “sell the news” event. Three factors together could explain why Bitcoin is struggling to maintain its value and what awaits us in the near future.
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GBTC outflow from Grayscale
The first and perhaps most direct cause of BTC's price decline is the massive outflow from Grayscale's Bitcoin Trust (GBTC). These outflows, which hit a record high of more than $640 million in one day according to Bloomberg analyst James Seyffart, have created significant selling pressure on Bitcoin. A total of around 3.5 billion US dollars has already flowed out.
Grayscale must sell Bitcoin to meet these repurchase obligations, causing an increase in supply in the market and therefore a decrease in price. According to Seyffart, the pace of these sales is currently only increasing. Maybe we'll fall even further.
Shot. BAD day for #Bitcoin Total ETFs in the Cointucky Derby. $GBTC About $640 million flowed out today. The outflows are not slowing down – they are increasing. This is the largest outflow for GBTC to date. The total to date is $3.45 billion. (I don't have BlackRock data yet) pic.twitter.com/jNOyiTADVq
— James Seyffart (@JSeyff) January 23, 2024
Futures and options markets
The second factor is the decline in activity in the futures and options markets. Open interest in Bitcoin futures fell significantly following the approval of spot BTC ETFs, indicating a decline in speculative interest among traders. This suggests a slowdown in overall market momentum and a possible shift in investor sentiment from bullish to bearish.
$BTC Binance / Bybit Open Interest & Delta
There is nothing too conclusive on the Perps market yet, other than the fact that short positions currently dominate the marketOffender bonuses often arise during times when spot limit sales occur in the price
Recognize rewards, especially when perpetrators push… pic.twitter.com/PdZtfIQK5U
— Skew Δ (@52kskew) January 22, 2024
“Despite the good news, the possibility of a Bitcoin crash remains”
Bitcoin news
The mood on the crypto market has completely changed
The final factor is the complete change in market sentiment. A few weeks ago, everyone was excited because Bitcoin spot ETFs could push the price of BTC to new heights. The mood was extremely optimistic and the positive expectations from analysts drowned out the negative analysis.
Now that has completely changed. The introduction of spot ETFs did not have the desired effect that many investors were hoping for, and that means many of them are now looking down. Now we have even broken through the important support zone around $40,000 many analysts Even if we assume that we will fall towards $35,000.
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