Can the price of bitcoin hold $40,000 following FTX’s $1 billion sale of Grayscale’s bitcoin ETF?
Can the price of bitcoin hold $40,000 following FTX’s $1 billion sale of Grayscale’s bitcoin ETF? Or Has the Bitcoin Bull Run Ended?
This week, worries about Mt. Gox and FTX caused a significant decline in the price of Bitcoin, which saw it fall to $40,000 from its peak of $49,000. This raised questions about the future of the cryptocurrency.
The spike was caused by the announcement by CNA that big firms like BlackRock were accepting and participating, but some analysts believe Bitcoin may retrace to as low as $31,000.
Analysis and forecasting of the price of bitcoin
The price of bitcoin is currently declining after a strong rejection from the psychological $49,000 mark. After plunging as low as $38,500, Bitcoin has managed to rise beyond $40,000 psychologically, even in the face of obstacles.
Until the price breaks and decisively remains above the support of $40,700 on the three-day period, holders of bitcoin are in a precarious situation. It’s clear from looking at the technical indications that Bitcoin has broken through a crucial resistance level.
When the stochastic RSI hits 90, it indicates an overbought state and, historically, a correction is about to occur. The daily chart confirms this observation, which increases the probability of a downturn.
When the chart shows an upward movement while the RSI progresses downward, a signal frequently associated with concealed bearish divergence, the standard RSI on both weekly and daily charts suggests a bearish divergence.
Even though there was first doubt about the possibility of a big change, Bitcoin has actually seen a major decline.
Taking into account investor behaviour, investors usually sell when the stochastic RSI rises above 70, and they purchase when it falls below 30. The oversold phase is a time of accumulation that can yield substantial profits for those who bought on the drop.
The price of Bitcoin might rise over $43,750, or in extremely bullish scenarios, reclaim the $49,000 mark, if the bulls win out and make a strong advance above $40,726. Overly optimistic results could push Bitcoin above the psychological $50,000 barrier, which was last tested in December 2021.
Conversely, given that the Relative Strength Index (RSI) is still trending lower and is below 50, there is a chance that the price of Bitcoin will continue to drop and may even break through the $37,800 support level. If buyer congestion decreases to this degree, Bitcoin may reach the psychological threshold of $30,000.
See our list of the best cryptocurrency initial coin offerings (ICOs) if you’re searching for further investing options.
News of Mt. Gox Bitcoin repayments causes market apprehension and volatility in prices.
Bringing up the present, Mt. Gox’s announcement that it will be paying back Bitcoin to creditors — which began with bank repayments in December 2023 — raises the possibility of a market selloff. It is anticipated that the market may be affected if a sizable portion of Bitcoin and Bitcoin cash are refunded.
When considering past occurrences, such the 2014 Mt. Gox crisis, it is clear that Bitcoin can recover from difficult circumstances. Different experts have different opinions about how Mt. Gox Trustee manages Bitcoin payouts.
While some propose a lump sum payback to be made all at once, others anticipate repayments to be made gradually over several months. “Certainly, the selling pressure should be relatively limited,” said Mindao Yang. Ultimately, the market has already taken into account the prices of the numerous debts that have been sold throughout the years.
Bitcoin has gained 1% in value during the last day and is presently trading at $40,068. The current 24-hour high is $40,254 and the low is $39,545. In addition, over the past day, there has been a 12% decrease in trading volume. Check out our advice on the top altcoins to purchase in 2023 right here.
The domino effect of FTX’s $1 billion sell-off on Bitcoin and market analysis
Following the approval of Bitcoin ETFs, the price of BTC decreased. In theory, the selling pressure may lessen now that FTX has completed the sale of its substantial interests. This is because it is not normal for a bankruptcy estate to liquidate holdings.
Since the Grayscale Bitcoin Trust (GBTC) was converted into an exchange-traded fund earlier this month, investors have sold off more than $2 billion worth of shares.
FTX’s bankruptcy estate sold 22 million shares as a significant portion of its departure, according to information gleaned from two people familiar with the matter and private data examined by CoinDesk.
After years of waiting for approval from the U.S. Securities and Exchange Commission, a plethora of spot Bitcoin ETFs went live on January 11.
But the Grayscale fund had already been around for ten years, operating as a less attractive closed-end fund, and had amassed assets of around $30 billion when the SEC approved its conversion to an ETF. It also endorsed ten newly established Bitcoin ETFs.
While money has been flowing into the recently formed funds from Fidelity and BlackRock, billions of dollars have been taken out of Bitcoin through GBTC. According to the information that CoinDesk examined, FTX was heavily involved in this withdrawal. It sold 22 million shares for about $1 billion, which eliminated FTX’s holding stake in GBTC.
In stark contrast to the high expectations held prior to the SEC’s announcement, the price of Bitcoin (BTC) has decreased since the ETFs were approved. Anxious predictions for the price of BTC were made since it was thought that Bitcoin ETFs would make it easier for regular investors to enter the market.
Rather, there has been a decrease in Bitcoin. The selling pressure may theoretically lessen now that FTX has finished selling its sizable stakes, as the liquidation of shares by a bankruptcy estate is a relatively uncommon occurrence.
