Bitcoin Declines Following First Bitcoin ETF Debut
Bitcoin experienced a sharp decline of over 7% to $41,600 in the wake of the debut of spot ETFs in the U.S. on Thursday. This decline has led analysts at 10x Research to caution that a classic “sell the fact” price action might be underway. The report, led by Markus Thielen, suggests that the sell-off might persist in the near term, potentially reaching a support level of $38,000. This decline follows high expectations for substantial inflows following the approval of spot ETFs. Bitcoin initially rallied to over $49,000, aligning with projections from a triangle breakout and the 2-3 year average price level for investors, often considered as resistance.
Technical Analysis Signals Bearish Momentum for Bitcoin
10x Research has conducted technical analysis on Bitcoin and points to a bearish divergence signaled by its Relative Strength Index (RSI). The RSI divergence, coupled with a drop of over 5%, has raised concerns about a correction in the market. Furthermore, the Moving Average Convergence Divergence (MACD) histogram crossing below zero supports a bearish shift in momentum. These technical indicators suggest that the current decline may continue in the near term.
Historical Patterns Suggest Market Fatigue for BTC
The report from 10x Research draws attention to historical precedents, noting significant retracements in Bitcoin’s price following key events such as the launch of Bitcoin futures in December 2017, the Coinbase listing in April 2021, and the October 2021 futures ETF. These historical patterns indicate a likelihood of market fatigue, suggesting that the current decline in Bitcoin’s price may be part of a larger correction.
Grayscale ETF Shifts May Add Downward Pressure on Bitcoin
Markus Thielen also notes that investors in Grayscale’s ETF, the former Grayscale Bitcoin Trust (GBTC), shifting to lower-fee options may contribute to downward pressure on Bitcoin’s price. While Grayscale charges a 1.5% management fee, competitors like BlackRock charge only 0.25%. Thielen emphasizes that Grayscale’s decision to bet on investors gradually switching from their higher-fee offering may impact Bitcoin’s value. This shift in investor preferences could create downward pressure on Bitcoin’s price.
Concerns Surrounding Grayscale and Potential Impact on BTC
The report from 10x Research highlights concerns surrounding Grayscale and its parent company, DCG. Negative news and the history of overcharging GBTC holders with a 2.0% management fee on a product that once traded at a 50% discount to its net asset value raise concerns about the credibility of Grayscale. Investors may be wary of holding Bitcoin through Grayscale, resulting in a potential sell-off and downward impact on BTC. This lingering concern adds to the overall market sentiment and may further contribute to Bitcoin’s current decline.
Analyst comment
Negative news: Bitcoin experienced a sharp decline following the debut of spot ETFs, leading to a “sell the fact” price action. Analysts predict the sell-off might persist in the near term, potentially reaching a support level of $38,000. Technical analysis signals bearish momentum with a RSI divergence and a bearish shift in momentum indicated by MACD. Historical patterns suggest market fatigue, and Grayscale’s ETF shift may add downward pressure. Concerns surrounding Grayscale’s credibility may further contribute to Bitcoin’s current decline.
