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This week, Bitcoin witnessed a substantial drop to $40,000 from its record high of $49,000, driven by concerns related to Mt. Gox and FTX, causing uncertainty about its future direction.
The surge, fueled by the news of CNA featuring acceptance and the participation of major players like BlackRock, but some analysts predict Bitcoin could retrace to as low as $31,000.
Bitcoin price analysis and price prediction
Bitcoin’s price is undergoing a retreat following a robust rejection from the psychological level of $49,000. Despite facing challenges, Bitcoin has successfully regained the psychological level of $40,000 after reaching a low point of $38,500.
Bitcoin holders find themselves in uncertain territory until the price breaks and conclusively stays above the support at $40,700 on the three-day timeframe. Upon examining the technical indicators, it becomes apparent that Bitcoin has surpassed a critical resistance level.
The stochastic RSI signals an overbought condition, reaching 90, historically indicating an impending correction. This observation is reinforced on the daily chart, further supporting the likelihood of a pullback.
The regular RSI on both weekly and daily charts reveals a bearish divergence, where the chart displays an upward movement while the RSI trends downward—a signal often associated with hidden bearish divergence.
Despite initial skepticism regarding the potential for a significant move, Bitcoin has indeed experienced a substantial drop.
Considering investor behavior, when the stochastic RSI exceeds 70, investors typically sell, while a level below 30 prompts buying. The oversold phase signifies a period of accumulation, resulting in significant gains for those who strategically bought during the dip.
If the bulls prevail, a decisive move above $40,726 would pave the way for Bitcoin’s price to surpass $43,750, or in highly bullish scenarios, reclaim the $49,000 level. Extremely optimistic outcomes could propel BTC beyond the psychological level of $50,000, last tested in December 2021.
On the flip side, with the Relative Strength Index (RSI) below 50 and continuing to trend downward, Bitcoin’s price may extend its decline, potentially slipping below the support at $37,800. Losing this level of buyer congestion could lead BTC toward the psychological level of $30,000.
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Mt. Gox Bitcoin repayment news sparks market concerns and price volatility
Turning attention to recent developments, Mt. Gox’s confirmation of repaying Bitcoin to creditors, initiated with bank repayments in December 2023, raises concerns about a potential market selloff. The expectation is that a considerable amount of Bitcoin and Bitcoin cash being repaid could have an impact on the market.
Looking back at historical events, such as the Mt. Gox incident in 2014, it is evident that Bitcoin has the ability to bounce back despite challenging situations. Experts hold varying perspectives on how Mt. Gox Trustee handles Bitcoin repayments.
Some anticipate gradual repayments occurring over several months, while others suggest a lump sum repayment happening all at once. Mindao Yang stated, “Certainly, the selling pressure should be relatively limited. After all, many debts have been sold over the years, and their prices have already been reflected in the market.”
In the past 24 hours, the price of BTC has increased by 1%, and it is currently trading at $40,068. The 24-hour low and high stand at $39,545 and $40,254, respectively. Moreover, the trading volume has dropped by 12% in the last 24 hours. Visit our guide to the best altcoins to buy now for 2023 here.
FTX $1 billion sell-off – The domino effect on Bitcoin and market analysis
BTC’s price dropped after the approval of Bitcoin ETFs. Theoretically, with FTX completing the sale of its significant holdings, the selling pressure might alleviate, considering that a bankruptcy estate liquidating holdings is a relatively uncommon occurrence.
Investors have offloaded over $2 billion worth of the Grayscale Bitcoin Trust (GBTC) since its conversion into an exchange-traded fund earlier this month.
BREAKING: According to reports from CoinDesk, it appears that up to 1/2 of the $2B in GBTC outflows were from FTX liquidating their 22 million shares.
In addition, FTX's sister hedge fund Alameda Research voluntarily drops its lawsuit against Grayscale Investments today. pic.twitter.com/zm9JgI5PEh
— Bitcoin News (@BitcoinNewsCom) January 22, 2024
A substantial part of this exit involved FTX’s bankruptcy estate selling 22 million shares, according to private data reviewed by CoinDesk and insights from two individuals familiar with the situation.
A multitude of spot Bitcoin ETFs commenced trading on January 11, finally receiving approval from the U.S. Securities and Exchange Commission after years of delays.
However, the Grayscale fund had already been in existence for a decade, structured as a less appealing closed-end fund, amassing nearly $30 billion in assets when the SEC greenlit its transformation into an ETF, along with endorsing 10 newly created Bitcoin ETFs.
While the recently launched funds from BlackRock and Fidelity have attracted inflows, GBTC has experienced the withdrawal of billions of dollars in Bitcoin. The data viewed by CoinDesk indicates that FTX played a significant role in this withdrawal. The 22 million shares it offloaded, depleting FTX’s GBTC ownership to zero, amounted to almost $1 billion.
Bitcoin’s (BTC) price has fallen since the approval of the ETFs, a sharp contrast to the high expectations held before the SEC’s announcement. Bitcoin ETFs were anticipated to provide a more accessible way for ordinary investors to enter the Bitcoin market, leading to optimistic predictions for BTC’s price.
Instead, Bitcoin has experienced a decline. Theoretically, now that FTX has completed the sale of its substantial holdings, the selling pressure might ease, considering that a bankruptcy estate liquidating holdings is a relatively rare event.
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