Bitcoin, the largest cryptocurrency by market value, has recently dropped below the $41,000 level due to strong selling pressure, particularly following the conversion of Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, which led to significant outflows.
Crypto analyst Ali Martinez has highlighted that Bitcoin’s price is moving within a parallel channel and has turned downwards after failing to surpass the $48,000 upper boundary of the channel. Martinez predicts a potential drop to the channel’s lower boundary at $34,000 before a recovery to the upper limit at $57,000.
On-chain data provider Santiment reports that investors remain optimistic about the long-term impact of the SEC’s approval of the first 11 spot Bitcoin ETFs on January 10. However, Santiment also suggests that the FOMO surrounding the ETF approval may have contributed to the market reaching its peak, indicating a possible shift in investment sentiment.
Experts believe that the widely anticipated spot ETF approval has already been priced in, which has led to Bitcoin’s price decline. Following a 16.9% drop from its peak market value the previous week, Santiment warns that the positive narrative surrounding ETFs could change, affecting market sentiment.
The market is keenly observing the use of words like “hype,” “scam,” or “disaster” following the ETF approval to gauge whether sentiment has turned negative. Santiment cautions that FUD and inexperienced investors could trigger a strong sell-off, echoing the post-hype downturn trend observed from October to December 2023.