Bitcoin Faces Decline as Spot ETFs Debut
Since the introduction of spot ETFs in the U.S. last week, Bitcoin has seen a decline of over 7% to $41,600. Analysts at 10x Research are warning that this could be a “sell the fact” scenario, indicating further price drops.
In their report, led by Markus Thielen, 10x Research suggests that the sell-off may continue in the near future and potentially reach a support level of $38,000.
Bitcoin’s Initial Rally and Potential Retracement
Initially, Bitcoin experienced a rally to over $49,000 following high expectations for significant inflows after the approval of spot ETFs. This aligned with projections from a triangle breakout and the average price level for investors over 2-3 years.
However, 10x Research’s technical analysis highlights a bearish divergence indicated by Bitcoin’s Relative Strength Index (RSI). Coupled with a drop of over 5%, concerns have arisen about a market correction.
The Moving Average Convergence Divergence (MACD) histogram crossing below zero further supports this shift in momentum.
Additionally, historical precedents show significant retracements in BTC following key events such as the launch of Bitcoin futures in December 2017, Coinbase listing in April 2021, and October 2021 futures ETF.
Grayscale ETF Shifts and Downward Pressure on Bitcoin
Another factor contributing to potential downward pressure on Bitcoin’s price is the shift of investors in Grayscale’s ETF to lower-fee options. Competitors like BlackRock charge only 0.25% management fee compared to Grayscale’s 1.5%.
This shift by investors may impact Bitcoin’s value, according to Thielen. Concerns surrounding Grayscale and its parent company, DCG, are also highlighted, including negative news and a history of overcharging GBTC holders with a 2.0% management fee.
10x Research suggests that investors may divest their Bitcoin holdings before transitioning to a different ETF provider, resulting in a downward impact on BTC.
Hot Take: Bitcoin Faces Potential Retracement Amidst ETF Debut
With the recent debut of spot ETFs in the U.S., Bitcoin has seen a decline in price. Analysts caution that this could be a “sell the fact” scenario, leading to further sell-offs in the near term. Technical analysis points to bearish indicators such as RSI divergence and a drop of over 5%. The MACD histogram crossing below zero supports a shift in momentum. Additionally, historical precedents suggest market fatigue following key events. The shift of investors from Grayscale’s higher-fee ETF to lower-fee options may contribute to downward pressure on Bitcoin’s price. It is advised to monitor the market closely during this period of potential retracement.
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