Bitcoin Tumbles Below $40K: A 20% Plunge Post-ETF Launch

• Bitcoin Price Dips Below $40,000 Mark: An Analysis
• Spot Bitcoin ETFs: A Closer Look
• Assessing the Downward Spiral
• 10x Research's Prediction for Q1 2024

Bitcoin Price Dips Below $40,000 Mark: An Analysis

The value of Bitcoin$42,260 -0.64% has taken a nosedive, slipping below $40,000 for the first time since December. This negative trend is attributed to the strong selling pressure that has surpassed buying, even with the significant inflow to the recently launched spot exchange-traded funds (ETFs).

Spot Bitcoin ETFs: A Closer Look

Several spot Bitcoin ETFs commenced trading on January 11, contributing to a brief surge in Bitcoin's price to $49,000. However, the increase was short-lived, falling steadily and eventually, below the $40,000 threshold. The digital currency is currently at its lowest value since early December, but still maintains a double increase from its value a year ago.

At a cursory look, new spot products have attracted a considerable influx of fresh capital. Two giants, BlackRock's (IBIT) and Fidelity's (FBTC), even surpassed $1 billion in assets under management (AUM) within a week of operations. However, this needs to be offset against the massive outflows from Grayscale's GBTC product as investors seek profits or transition to other cost-effective alternatives. The outflow trend isn't unique to GBTC; previously established spot Bitcoin ETF products in Europe and Canada, and futures-based ETFs like ProShares' (BITO), have witnessed a similar trend.

Assessing the Downward Spiral

According to a report from 10x Research, the Bitcoin market has adopted a bearish trend for the first time since October 2, when the price was $27,530. This shift might bring some solace to bulls who recall last October as the starting point for a subsequent 70% price hike within the next three months.

10x Research's Prediction for Q1 2024

The central outlook from 10x for the first quarter of 2024 suggested that any rally stimulated by ETFs would be deceptive, leading to a price decline towards $38,000 by March. So far, this prediction seems to be materializing, albeit more rapidly than anticipated.

Edited by Jonathan Stoker