Bitcoin loses advantage gained after ETF launch: What is the forecast?
Bitcoin loses advantage gained after ETF launch: What is the forecast?
Bitcoin had its worst run in about a month as the hype surrounding new US exchange-traded funds for the largest digital asset subsided. The major cryptocurrency is down more than 5 percent from its highs since spot ETFs were launched in the U.S. on Jan. 11.
Bitcoin fell for three straight days through Sunday and continued its bearish move on Monday, marking its longest losing streak since mid-December.
Crypto's Fear and Greed Index fell to "neutral" for the first time since last October. This is due to the fact that the launch of spot exchange-traded funds (ETFs) on Bitcoin has failed to keep the price of the major cryptocurrency down.
At the time of writing, the price of BTC stood at $42,630.
Experts see this as a clear demonstration of the "sell the news" principle. The sell-off could continue in the near future, Yahoo.Finance reported.
Analysts at 10x Research said in a note to clients that "Bitcoin's RSI divergence signals a correction." They believe a pullback could lead to the $38,000 support level.
Traders closing out their BTC positions now and locking in profits from that trade could be a reason for Bitcoin's weakness.
A package of 11 ETFs, including giants BlackRock, Ark/21Shares, Fidelity, Invesco, and VanEck, was approved by the SEC on January 10th, and ETF trading began on January 11th. Bitcoin then surprised with a sharp rise to $49,000, but then began to lose ground.
IG Australia market analyst Tony Sycamore believes that the rise and subsequent fall of BTC are signs of a "buy on rumors, sell on facts" reaction. The expert predicts a further decline to $38,000-40,000 based on Bitcoin's chart pattern signals.
Bloomberg Intelligence ETF Senior Analyst Eric Balchunas pointed out that ETFs received net inflows of $819 million in the first two days of trading. The $26 billion Grayscale Bitcoin Trust saw outflows of $579 million after converting to ETFs. However, it is not necessarily true that all of the outflows from the Grayscale Bitcoin Trust were redirected into Bitcoin.
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Proponents of Bitcoin ETFs are confident that investment in BTC will grow as the barriers to purchase for retail investors are minimized. Spot BTC ETFs have increased investor access to the cryptocurrency. However, some experts are concerned about the increasing downside and heightened risks, which could lead to a repeat of the crypto market's dramatic crash in 2022.
Also read: Bitfinex prevents exploit related to the transfer of XRP
