The value of Bitcoin faces a potential decline to $38,000, according to the projections of 10x Research, in response to the recent launch of spot Bitcoin ETFs in the United States. Since the introduction of these products, BTC experienced a 5% decrease, settling at $42,600. This pullback, classified as a “Sell the News” action, could extend according to the technical analysis of 10x Research, led by Markus Thielen.
The report highlights a bearish divergence in Bitcoin’s relative strength index (RSI), indicating an imminent correction. This divergence occurred when BTC reached a two-year high, surpassing $49,000 last week, without confirmation from the 14-day RSI. This phenomenon suggests exhaustion in the bullish trend and preceded the subsequent decline in the cryptocurrency’s price.
🚀 Wave 4 Started – How low will Bitcoin drop?
👇 1-10) In our Dec 29 note, ‘How should traders position themselves in the uncertain ETF approval period’, we featured a triangle pattern that tends to predict a +/-10% move in either direction. While we got the rally, this… pic.twitter.com/X2IcnEP5EM
— 10x Research (@10x_Research) January 15, 2024
Grayscale Could Be One of the Causes of Bitcoin’s Plunge
Thielen points out that the potential downward pressure on BTC’s price could be partly due to investors shifting from the Grayscale Bitcoin Trust (GBTC) to options with lower fees. Grayscale, historically one of the largest Bitcoin holders, charges a 1.5% fee, compared to other alternatives like BlackRock, which applies a 0.25% fee. GBTC, with over $27 billion in assets, became redeemable on January 11, potentially triggering a transfer of investments to more cost-efficient options.
The report emphasizes that investors, when changing their exposure to BTC, might choose to sell their assets before transferring them to another ETF issuer. This strategy could generate additional downward pressure on the leading cryptocurrency’s price, acting as a kind of drag on the market.
The cryptocurrency market has always been and remains susceptible to volatility, and price predictions should be approached with caution. However, 10x Research’s analysis provides a grounded perspective on potential factors that could influence the market’s direction. The relationship between the introduction of spot ETFs, the bearish divergence in the RSI, and the shift in investment preferences offers a comprehensive view of the elements that could impact Bitcoin’s price in the short term.
For now, Bitcoin is in a correction phase, with investors closely monitoring technical indicators and market movements, preparing for possible scenarios as the cryptocurrency seeks to find its balance amid changes in the financial landscape.