Analysts anticipate that the outflows from Grayscale’s Bitcoin Trust (GBTC) ETF, coupled with investors shifting to lower-fee options, will exert downward pressure on Bitcoin price.
Bitcoin (BTC) experienced a rocky weekend as it fell below $42,000 for the second time, failing to break above $43,100 amid subdued trading volumes. The excitement surrounding the approval and launch of spot Bitcoin Exchange-Traded Funds (ETFs) initially propelled the flagship crypto to a two-year high above $49,000. However, the aftermath has been marked by a notable downturn, with market reactions reflecting the classic “sell the news” phenomenon.
Bitcoin Price Liquidations Across Exchanges
Over the past 24 hours, Bitcoin witnessed $28.06 million in liquidations, with approximately 85% of them being long positions, amounting to $80.57 million, according to CoinGlass data. Prominent exchanges such as Binance and OKX faced substantial liquidations, with losses totaling $7.51 million and $5.26 million, respectively.
As of the latest data, BTC is trading at $42,646 on major exchanges, still above the key support level of $40,250. Moreover, according to the Crypto Fear & Greed Index, Bitcoin’s market sentiment score is currently 52 out of 100, the lowest since October 19, 2023, when it traded for an average daily price of around $31,000.
The initial surge in Bitcoin’s price, propelled by the approval and launch of spot Bitcoin ETFs, has been followed by a downturn. This phenomenon is characteristic of “sell the news” events, where market participants quickly sell-off after the anticipated event occurs. The excitement surrounding ETFs propelled Bitcoin to a two-year high above $49,000, but subsequent sell-offs have been notable.
Technical indicators, such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), suggest a potential continuation of the current sell-off. 10x Research, led by Markus Thielen, points to RSI divergence as a signal for correction, emphasizing that the pullback might find support near $38,000. The MACD histogram crossing below zero indicates a bearish shift in momentum.
Impact of Grayscale’s ETF and Institutional Activity
Analysts anticipate that the outflows from Grayscale’s Bitcoin Trust (GBTC) ETF, coupled with investors shifting to lower-fee options, will exert downward pressure on Bitcoin price. Grayscale, charging a 1.5% management fee, faces competition from asset managers like Franklin Templeton, which charges only 0.19%.
Thielen suggests that the negative sentiment surrounding Grayscale, including a history of overcharging GBTC holders, may lead to investors selling before transferring their Bitcoin exposure to alternative ETF issuers.
In contrast, ETF issuers, reportedly buying 23,000 BTC amid the downturn, remain optimistic about the potential for institutional demand. BlackRock Inc (NYSE: BLK) alone has acquired 11,500 Bitcoin. Whether this institutional interest can sustain and counterbalance the negative sentiment remains uncertain.
Overall, Bitcoin’s recent price fluctuations, influenced by the ETF hype and subsequent sell-off, highlight the market’s sensitivity to major events. As the market navigates these dynamics, investors are advised to stay vigilant and monitor key support and resistance levels for potential trading opportunities.
