- Coinbase’s Premium Index was negative, indicating U.S. investors’ strong selling pressure.
- Derivatives traders were going short on Bitcoin.
Bitcoin [BTC] wiggled in the $41,000 region at the time of writing, contrary to the high expectations market participants had following the launch of spot ETFs in the U.S.
Grayscale outflows cause downsides for BTC
The king coin was down 14% from the top of $48,000 on the day regulators certified spot ETFs for trading, AMBCrypto noticed using CoinMarketCap’s data.
Bitcoin’s slump was attributed to the billions of outflows from Grayscale Bitcoin Trust (GBTC) which now stands converted into a spot ETF.
According to CryptoQuant, nearly 52,000 Bitcoins have been redeemed over the last four days from the trust, amounting to $2.1 billion at prevailing market prices.
While experts have referred to this as fund reallocation to cheaper spot ETFs, it is possible that many GBTC shareholders were profiting on Bitcoins that they were previously barred from accessing.
Source: CryptoQuant
More pain ahead?
The result — a significant downward pressure on Bitcoin’s price. In fact, analysts from 10x Research predicted that Bitcoin might dip below $40K by the end of January, with support developing at $38K.
This might seem true, considering Grayscale still holds more than 566,000 Bitcoin in its custody.
A look at Coinbase’s Premium Index chart lent more credence to the bearish prediction. The negative values indicated U.S. investors’ strong selling pressure.
Source: CryptoQuant
Bearish narrative gets stronger
AMBCrypto then turned to Bitcoin’s technical indicators to take stock of its short-term prospects.
The Relative Strength Index (RSI) hovered below the neutral 50 level, implying that bears were in control.
The Moving Average Convergence Divergence (MACD) indicator moved along the negative territory, with the signal line staying over the MACD line. With no immediate possibility of a bullish crossover, bears were likely to stay in control.
Source: Trading View
Read Bitcoin’s [BTC] Price Prediction 2024-25
The extent of the bearishness was also observed through the active positions taken for the king coin.
As per Coinglass, the number of bearish short positions for Bitcoin have overtaken bullish longs over the last few days. This meant that most traders expected Bitcoin to dip further in the days ahead.
Source: Coinglass