Bitcoin Price Faces Sharp Decline Following BTC ETF Trading Commencement
Since January 11, the price of Bitcoin has experienced a significant drop, coinciding with the commencement of BTC ETF spot trading. According to JPMorgan investment bank, the price decline has been driven by news of the Grayscale Bitcoin Trust (GBTC) buyback, but the situation may change soon.
JPMorgan: Grayscale’s GBTC Profit-Taking Likely Concluded JPMorgan investment firm suggests that Bitcoin has mitigated further decline, drawing the conclusion that profit-taking on GBTC has mostly concluded.
The bank acknowledges that the BTC market value has decreased by over 20% since the introduction of BTC ETF spot trading. Thursday’s report indicates that the Bitcoin price drop is attributed to investors buying the fund at a discount to profit through GBTC.
JPMorgan’s Chief Operating Officer, Nikolaos Panigirtzoglou, wrote:
“With $4.3 billion pulled out of GBTC, we conclude that the majority of GBTC profit-taking has occurred. This means that the downward pressure on Bitcoin from that channel has essentially ended.”
Bitcoin Price Prospects as JPMorgan States BTC has Bottomed Out From the recent low of $39,431, the Bitcoin price continues to find support from the 100-day Simple Moving Average (SMA) at $39,458. The Relative Strength Index (RSI) indicates that the bull camp is resisting further downward trends as it moves horizontally.
However, the RSI’s position below the 50 midline is concerning as it signals weak price strength. This indicates an advantage for the bearish camp, emphasized by the convergence of the Moving Average Convergence Divergence (MACD) below its signal line (orange) in the negative zone. These indicators reinforce the bearish outlook, highlighted by the Awesome Oscillator (AO) in the negative region, evidence of bearish dominance in the BTC market.
Increasing selling pressure may cause the Bitcoin price to slide below the 100-day SMA at $39,458. Further south, it could extend to the support level at $37,800, and below that, BTC would continue its decline towards the 200-day SMA at $33,623.
In a severe scenario, the Bitcoin price could slide back to the psychological level of $30,000. Such a move would signify a 25% decline from the current level.
On the flip side, if the 100-day SMA holds its support role, the Bitcoin price could rebound, surpassing the 50-day SMA at $42,931. It could also break the resistance level at $43,750 before breaking into an ascending parallel channel.
In the event of a strong price surge, the Bitcoin price may surpass the consolidation zone between the channel’s midline and the crucial resistance at $48,000, bringing the psychological level of $50,000 into focus, representing a 25% increase from the current price.
