With the recent launch of spot bitcoin ETFs in the US market, resulting in massive profit taking, attention is now focused on price projections for the leading digital currency.
Market analysts offer their perspectives in the middle of a bitcoin trading range that oscillates between $41,000 and $43,000, from last Friday to the current day. The price has been sideways in this area since declining from $49,000 following the launch of the ETF.
In my opinion, it is not unreasonable to expect a price drop of 20%-30%, which would place bitcoin between $39,200 and $34,300. While it is important to know the general trading volume that each ETF handles, the key factor is the net flow (inflows) of what each fund has left to buy bitcoin .
The total trading volume of the ETFs in the last four days was almost $12 billion, while the net flow was $1.2 billion. As I wrote in the eariler post these inflows did not drive the price of BTC upward, because it is largely a rotation of capital from the Grayscale fund (GBTC) to the rest.
BlackRock's fund (IBIT) now exceeds $1 billion in net flow. Fidelity (FBTC) is close behind and Bitwise (BITB) is firmly in third place now. Five of them exceed USD 100 million, as seen in the table. Meanwhile, GBTC saw outflows of $1.6 billion.
Let us remember that GBTC, unlike the other ETFs, is an investment fund that already existed, but was traded in secondary markets. The selling of positions in this fund is due, in part, to investors taking their money out to other spot bitcoin ETFs that offer better commissions.
For now, what the funds have raised in bitcoin is “low for expectations.” However, as the days, weeks and months go by, the price of bitcoin would rise.
In any case, I'm bearish only in the short term, in part because the amount of BTC that the funds acquired in their first two days was 5,439 BTC and 1,906 BTC respectively. If the amount of BTC purchased by funds continues to decline, it is possible that the currency will drop to the previously mentioned prices.
Another factor that is impacting the market is the massive sale of the currency by Bitcoin miners, something that has put downward pressure on the main cryptocurrency. However, it should be taken into account that the next halving (halving of BTC issuance), scheduled for April-May, will reduce its supply, helping to boost the price.
Bitcoin is likely to fall below $40,000 if bearish pressure continues
Based on the current price of bitcoin, it is likely that there will be a rebound to $44,200, an area it maintained at the beginning of the month, and a decline after that. Bitcoin could go down much further, to $36,000 in the following weeks and even until the month of March. If it drops to a point below 40,000, it would be confirmation that we would go to 36,000.
As the chart shows, bitcoin has maintained support over the last month around the $40,000, $36,000 and $34,000 zones. Therefore, there is a possibility that the market will hit the brakes on these prices if the downward pressure continues.
The market tends to reiterate support and resistance zones, that is, price levels where demand is greater than supply and the opposite. Normally when you touch one of these areas on multiple occasions, you manage to penetrate them through the traders' psychology. Therefore, if the currency approaches $40,000, its decline from there is possible.
