If you religiously check the crypto market in the morning, chances are that you woke up to a rude shock after finding out that Bitcoin has slipped below $30,000 once again.

Whenever Bitcoin crosses below a critical support level as has been the case in the last 24 hours, it provokes two ideologies. On one hand, there are those who panic sell because they think the market is about to crash even harder, and those who a bearish downturn is an opportunity to buy low. However, analyzing the reasons behind such a decline allows traders to make better-informed decisions on whether to buy, hold or sell.

Grayscale’s regulations caused the current crash

Grayscale is one of the biggest crypto holdings companies and as such, its activities are bound to influence the market. Its GBTC shares unlocking is the likely culprit behind the recent Bitcoin price slump. GBTC shares are almost equivalent to crypto ETFs. However, they are slightly different in that ETFs mint and burn shares regularly depending on demand, while GBTC’s supply is not as flexible because of the regulatory path they follow.

When Grayscale sells a lot of GBTC shares, it has to reduce the amount on offer and they achieve this by selling the BTC which backs those shares. The problem is that the regulatory approach prevents Grayscale from selling randomly at any given time. Instead, they are sold all at once, which means more Bitcoin is dumped into the market, thus pushing down the price. It is difficult not to think that the regulators allowed this approach so that they can manipulate crypto prices to their own gain.

The recent unlock is supposed to release roughly 40,000 BTC and roughly 16,000 of them were unlocked on Sunday. The unlock did not have much of an impact at first because the price of Bitcoin was already low and it also suggests that most people were not willing to sell at discounted prices. However, the recent reports about the GBTC unlock may have triggered selloffs by weak hands, thus the recent slide below $30,000.

What to expect moving forward

Bitcoin is currently trading at $29,641 after tanking by 5.73% and the recent price drop increased its weekly decline to 10.90% at the time of this press.

Source: Binance

Bitcoin has been trading below the 7-day and 25-day moving average at least for the last few days, confirming the prevailing bearish sentiments. There was a spike in selling volume during yesterday’s trading session, which reflects the current price action. The fact that there are still some more GBTC shares to be sold in the market means more BTC will be dumped when that sale happens and it might further suppress BTC’s performance. If that happens, Bitcoin’s next support level will be around $28,800.

More dips might be on the way if shareholders decide to sell. On the other hand, a discounted price and potential upside might encourage them to hold on and potentially even buy some more. If that were the case then the recent price downturn might be short-lived and another bull run might be on the way. However, there is still a lot of uncertainty in the market and it can still go either way.

Summary

Unfortunately, Bitcoin still has a major impact on the rest of the crypto market and so the latest price drop triggered some bearishness in the altcoin market. If retail demand has enough appetite to buy the dumped Bitcoin at lower prices, then the market will likely experience a quick recovery. However, there is still a need to exercise caution considering that Grayscale’s shareholders are yet to offload the remaining GBTC shares.