Home Bitcoin News Bitcoin Faces Market Headwinds: Analysts Warn of Potential Downtrend After ETF Debut

Bitcoin Faces Market Headwinds: Analysts Warn of Potential Downtrend After ETF Debut

In a recent analysis by 10x Research, led by Markus Thielen, concerns have emerged about Bitcoin’s short-term performance following the debut of spot ETFs in the U.S., with the cryptocurrency experiencing a 7% decline to $41,600. The report suggests a classic “sell the fact” scenario might be unfolding, warning investors of a possible prolonged sell-off, potentially reaching a support level of $38,000.

Bitcoin’s initial rally post-spot ETF approval saw prices surpassing $49,000, in line with projections from a triangle breakout and the 2-3 year average price level considered as resistance. However, the technical analysis conducted by 10x Research now points to a bearish divergence signaled by Bitcoin’s Relative Strength Index (RSI), coupled with a drop of over 5%, raising concerns about an imminent correction.

The initial optimism surrounding the spot ETF approval led Bitcoin to rally to over $49,000. This surge aligned with earlier projections based on a triangle breakout and the 2-3 year average price level—a significant resistance point for investors. However, 10x Research, in its December 29 note, had already highlighted a triangle pattern, indicating the possibility of a +/-10% move in either direction. The recent retracement appears to be in line with this predictive analysis.

Technical indicators, such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) histogram, are now signaling a bearish divergence and a shift in momentum towards a correction. The RSI divergence, combined with a more than 5% drop, intensifies concerns among analysts about a potential market correction.

Markus Thielen, the lead analyst at 10x Research, draws attention to historical precedents, citing retracements following significant events like the December 2017 Bitcoin futures launch, the Coinbase listing in April 2021, and the October 2021 futures ETF. These patterns, according to Thielen, hint at a broader issue of market fatigue.

Adding to the complexity, Thielen notes the potential downward pressure on Bitcoin’s price due to investors in Grayscale’s ETF (formerly Grayscale Bitcoin Trust) shifting to lower-fee options. While Grayscale imposes a 1.5% management fee, competitors like BlackRock charge only 0.25%. Thielen speculates that Grayscale’s bet on investors gradually moving away from their higher-fee offering may impact Bitcoin’s value.

The Moving Average Convergence Divergence (MACD) histogram crossing below zero further supports a shift in momentum towards a bearish trend. 10x Research emphasizes the importance of historical precedents, citing retracements following significant events such as the December 2017 Bitcoin futures launch, the Coinbase listing in April 2021, and the October 2021 futures ETF.

Analysts suggest that these historical patterns might indicate market fatigue, signaling a need for caution among investors. Additionally, concerns have been raised about Grayscale’s ETF, formerly known as the Grayscale Bitcoin Trust (GBTC), as investors shift to lower-fee options, potentially adding downward pressure on Bitcoin’s price.

Markus Thielen notes that competitors like BlackRock, charging only 0.25% management fee compared to Grayscale’s 1.5%, may attract investors away from the higher-fee offering. The decision by Grayscale to bet on a gradual transition from their higher-fee product may impact Bitcoin’s overall value, with investors likely divesting their holdings before switching to a different ETF provider.

Thielen also highlights concerns about Grayscale and its parent company, DCG, citing negative news and a 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. These factors contribute to lingering concerns among investors, potentially impacting Bitcoin’s value in the coming weeks.

As the cryptocurrency market navigates these challenges, it becomes crucial for investors to monitor technical indicators, historical patterns, and the evolving landscape of ETF offerings. The cautionary outlook presented by 10x Research serves as a reminder that even in the volatile world of cryptocurrencies, informed decision-making remains key to navigating market fluctuations successfully.

Read more about:
Share on

Sakamoto Nashi

Nashi Sakamoto, a dedicated crypto journalist from the Virgin Islands, brings expert analysis and insight into the ever-evolving world of cryptocurrencies and blockchain technology. Appreciate the work? Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

Rate this article 0 / 5. 0

Crypto newsletter

Get the latest Crypto & Blockchain News in your inbox.

By clicking Subscribe, you agree to our Privacy Policy.