Bitcoin's Forecast: Analyst Predicts Deeper Dip to $38K

• Bitcoin: A Decline Following the Debut of Spot ETFs in the U.S.
• Potential Continuation of the Downtrend
• Bearish Divergence: An Explanation
• Altered Momentum Indicated by MACD Histogram
• Effect of Grayscale's ETF on Bitcoin's Price
• Grayscale's Investment Strategy
• Further Impact on Bitcoin

Bitcoin: A Decline Following the Debut of Spot ETFs in the U.S.

Bitcoin$42,260 -0.64% (BTC) has seen a notable price drop of more than 5%, reducing its value to $42,600, following the launch of spot ETFs in the U.S last Thursday. This phenomenon is typically referred to as sell the fact price action.

Potential Continuation of the Downtrend

Based on an analysis of bitcoin's price patterns and technical indicators by 10x Research, it is suggested the downward trend may persist for a short period. A statement from 10x Research, under the leadership of Markus Thielen, on Monday indicated a prospective correction for Bitcoin, signaled by an RSI divergence. It was also suggested that the pullback may reach a standstill at the dynamic support level of $38,000.

Bearish Divergence: An Explanation

A bearish divergence takes place when the prices hit a new extreme, and momentum indicators like the relative strength index (RSI) do not, suggesting a potential exhaustion of the upside. Bitcoin reached a two-year high over $49,000 last week, which was not confirmed by the 14-day RSI, indicating a bearish divergence. The consequent price decline has validated the bearish divergence.

Altered Momentum Indicated by MACD Histogram

The MACD histogram, an indicator used to measure trend strength and changes, has crossed below zero, signifying a bearish shift in momentum.

Effect of Grayscale's ETF on Bitcoin's Price

Furthermore, Markus Thielen hypothesizes that investors in Grayscale's ETF, the Grayscale Bitcoin Trust (GBTC), transitioning to alternative low-fee options will likely influence bitcoin's price. Whilst Grayscale imposes a 1.5% charge, other asset managers, such as BlackRock, charge significantly less at 0.25%. GBTC, which began trading in 2013 and became redeemable on January 11th, holds one of the largest bitcoin holdings, with a coin stash worth over $27 billion.

Grayscale's Investment Strategy

Grayscale is speculating that investors will gradually transfer out of their ETF offering, which has a 1.5% annual management fee, for tax consideration purposes. It is anticipated that investors will opt for other reliable companies that offer 80% less in fees. There has been considerable negative coverage surrounding the parent company DCG and Grayscale itself, particularly regarding their 2.0% management charge on a product that at one point traded at a 50% discount to its net asset value, excessively overcharging GBTC holders, according to 10x.

Further Impact on Bitcoin

10x Research further suggests that investors will first dispose of their holdings before transferring their BTC exposure to another ETF issuer, causing a downswing pressure on Bitcoin.

Edited by Jonathan Stoker