Bitcoin saw a decline of over 7% to $41,600 following the approval and trading commencement of the first US spot Bitcoin ETFs. Analysts from 10x Research attribute the drop to the “buy the rumor, sell the news” investment strategy, warning that the selling could continue in the short term and potentially test the support level at $38,000.
The fall in Bitcoin’s price came after high expectations of significant capital inflows following the approval of 11 spot ETFs in the US. Initially, Bitcoin rose to $49,000 due to a breakout from a triangle formation on the price chart but then sharply retracted. 10x Research had previously noted the triangle formation, predicting a potential +/- 10% movement in either direction.
Technical analysis by 10x Research points to a downtrend indicated by the Relative Strength Index (RSI), with concerns of a market correction increasing as the RSI trend combined with a decline of over 5%. The Moving Average Convergence Divergence (MACD) indicator falling below zero also signals a loss of momentum for Bitcoin.
The report also highlights historical precedents where significant pullbacks followed major events such as the launch of Bitcoin futures in December 2017, Coinbase’s listing in April 2021, and the Bitcoin futures ETF in October 2021, suggesting a pattern of market exhaustion.
Furthermore, changes in Grayscale’s spot Bitcoin ETF, particularly the Grayscale Bitcoin Trust (GBTC), could add downward pressure on Bitcoin’s price as investors shift to lower-fee ETFs offered by competitors like BlackRock. Concerns are also raised regarding Grayscale and its parent company Digital Currency Group’s (DCG) past of charging high management fees, which could lead to increased selling of BTC assets by investors before moving to a different ETF issuer, potentially exerting further downward pressure on Bitcoin.