Bitcoin price fell below $39,000 yesterday, marking the first time in over 50 days. The decline started on January 11 and has accumulated a total drop of 21%. The main reasons for the decline include the selling news impact of the SEC approving a Bitcoin spot ETF, as well as outflows from GBTC and weakened rate cut expectations.
Yesterday, the price of Bitcoin dropped below $39,000 for the first time in over 50 days. Looking at the Bitcoin price chart, the decline began on January 11, coinciding with the approval of a Bitcoin spot ETF by the US Securities and Exchange Commission (SEC). Within the past 12 days, Bitcoin has accumulated a 21% drop, triggering a total liquidation of long (buy) futures contracts worth $385 million.
The reasons behind this include the selling news impact of the Bitcoin spot ETF approval, as well as recent market concerns about outflows from GBTC, rate cut expectations, and the repayment from Mt. Gox.
The US Department of Labor released the latest CPI data on the evening of the 11th, showing a 3.4% year-on-year increase, which exceeded expectations and poured cold water on market rate cut expectations. According to the Fed Watch data from the Chicago Mercantile Exchange (CME), the possibility of a rate cut in March dropped from 81% in the previous week to 49%. In addition, investors currently expect only five rate cuts this year, compared to the previous expectation of six.
Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, known as the “dove king,” stated on the 18th that he still expects the Federal Reserve to wait until the third quarter to start cutting rates. Early rate cuts may lead to a surge in demand and subsequently cause inflation.
According to statistics from account CC15Capital, the Bitcoin spot ETF reduced its holdings by a total of 1,784 BTC on the 22nd. Among them, GBTC alone reduced its holdings by 15,986 BTC, which was offset by the increase of holdings by other spot ETFs of 14,202 BTC. Lookonchain monitoring data also indicated that after 10 PM last night, Grayscale addresses once again transferred a total of 15,222 BTC (about $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, informed sources revealed that a large number of GBTC sell-offs included the bankruptcy liquidation team of FTX, who sold nearly $1 billion worth of GBTC and nearly emptied 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 all creditors by October this year. Yang Mindao, the founder of decentralized stablecoin protocol dForce, recently tweeted that Mt. Gox has confirmed the ownership of the exchange addresses 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. Peter Brandt, a trader with over 710,000 followers, stated yesterday that “Bitcoin price has completed a right-angled expanding triangle, negating any BTC above $42,400,” confirming the bearish trend. According to the chart shared by Brandt, the target price for the bearish trend is around $34,700.
Bitfinex, a veteran exchange, 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.
Related Reports
No hope for rate cuts in March? Federal Reserve dove king: Too many uncertainties and rushing to loosen may reignite inflation.
The culprit behind Bitcoin falling below $40,000? Informed sources: FTX sells nearly $1 billion worth of Grayscale GBTC.
Bloomberg analyst: BlackRock Bitcoin spot ETF “trading volume surpasses” the combined total of 500 new ETFs launched last year.