Bitcoin price fell below $39,000 yesterday for the first time in over 50 days. This decline, which started on January 11, has accumulated a 21% drop, mainly due to the impact of selling news of the SEC-approved Bitcoin spot ETF, as well as the outflow of GBTC funds and weakened rate cut expectations.
Summary:
Bitcoin price dropped below $38,500 and rebounded, while Ethereum temporarily fell below $2,200. Grayscale also sold 15,000 BTC.
Background:
Bitcoin faces massive selling pressure from Mt. Gox! Announces the start of claims: 200,000 BTC may be unlocked in the next two months.
Table of Contents:
Weakening Rate Cut Expectations
Potential Selling Pressure 1: Bitcoin Spot ETF Net Outflow
Potential Selling Pressure 2: Mt. Gox Exchange Repayment
Analysts’ target price range: $34,000 to $38,000
Yesterday (23rd), the price of Bitcoin fell below $39,000 for the first time in over 50 days. Looking at the Bitcoin price chart, the decline started on January 11, coinciding with the approval of the Bitcoin spot ETF by the U.S. Securities and Exchange Commission (SEC). In the past 12 days, Bitcoin has accumulated a 21% drop, triggering a total of $385 million in liquidation of Bitcoin long (buy) futures contracts.
The reasons behind this include the impact of selling news after the approval of the Bitcoin spot ETF, the recent high outflow of GBTC funds, rate cut expectations, and the repayment by Mt. Gox.
BTC price chart
The U.S. Department of Labor released the latest CPI data on the evening of the 11th, showing a year-on-year increase of 3.4%, which exceeded expectations and dampened rate cut expectations in the market. According to the Fed Watch data from the Chicago Mercantile Exchange (CME), the likelihood of a rate cut in March decreased from 81% the previous week to 49%. In addition, investors currently expect only 5 rate cuts throughout the year, compared to the previous expectation of 6 rate cuts.
Raphael Bostic, the President of the Federal Reserve Bank of Atlanta, known as the “dovish king,” stated on the 18th that he still expects the Federal Reserve to wait until the third quarter to start cutting rates, as an early rate cut could lead to a surge in demand and subsequently cause inflation.
According to statistics from the X account CC15Capital, Bitcoin spot ETFs reduced their holdings by a total of 1,784 BTC on the 22nd, with GBTC alone reducing its holdings by 15,986 BTC, which was offset by the increase of 14,202 BTC in other spot ETFs. Lookonchain monitoring data also indicates that last night, after 10 pm, Grayscale addresses once again transferred a total of 15,222 BTC (approximately $580 million) to Coinbase Prime (a total of 79,213 BTC has been transferred to Coinbase Prime since the approval of the spot ETF).
In addition, on the late night of the 22nd, an informant revealed that a large number of GBTC sellers included the FTX bankruptcy liquidation team, who sold nearly $1 billion worth of GBTC, nearly emptying their GBTC holdings.
Another potential selling pressure that Bitcoin investors are concerned about is the repayment from the now defunct Mt. Gox exchange, which is expected to unlock approximately 140,000 BTC worth about $5.51 billion.
Some initial repayments occurred in December last year, but the trustee expects to repay the creditors by October this year. dForce founder Yang Mindao recently tweeted that Mt. Gox has confirmed ownership of the exchange address accounts previously entered by creditors and will begin the repayment process.
On the other hand, from a technical analysis perspective, many analysts have turned bearish on Bitcoin. Trader Peter Brandt, who has over 710,000 followers, stated yesterday, “Bitcoin price has completed a right-angled expanding triangle, invalidating any BTC above $42,400,” confirming a bearish trend.
According to the chart shared by Brandt, the target price for the bearish trend is around $34,700.
The well-established exchange Bitfinex stated on the 22nd that the short-term target price for Bitcoin is between $38,000 and $36,000, and the long-term target price is $32,000 before the halving.
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