After the approval of the spot Bitcoin Exchange Traded Fund (ETF) in the United States by the Securities and Exchange Commission (SEC), members of the cryptocurrency community haven’t experienced any bullish moves, especially in Bitcoin and other cryptocurrencies. Amidst this, on January 16, 2024, CryptoQuant, a leading on-chain analytics firm, posted on X (previously Twitter) that the cryptocurrency market, especially Bitcoin, may experience potential selling in the coming days.
Potential sell-off in Bitcoin, CryptoQuant
CryptoQuant shared this data based on the Mean Exchange Inflow, which reached above 7, signaling possible selling pressure. The post by the on-chain analytics firm also anticipates that we may experience this in the upcoming days or weeks. As this data is shared by a leading on-chain analytics firm, it gathered wide attention from the cryptocurrency communities.
However, this selling pressure is also linked to the Grayscale Bitcoin Trust (GBTC). As discussed earlier, when GBTC was trading at a discounted price to net asset value (NAV) in early 2023, a significant number of GBTC shares were traded in the secondary market, as reported by JP Morgan.
Additionally, from January 2023 to December 2023, over $2.5 billion of funds moved into GBTC, as per the JP Morgan report. This significant fund influx into GBTC may impact the coming days as GBTC is successfully transformed into a spot Bitcoin ETF. The same data and link CryptoQuant mentioned in its recent post on X.
Meanwhile, the Exchange Inflow (Mean) is inversely correlated with the price of Bitcoin, as indicated by the chart CryptoQuant shared in its report. Another chart shared by CryptoQuant indicates that in the coming days, we may experience short-term price corrections as the fund holding is drastically declining.
Bitcoin price and its technical analysis
Currently, Bitcoin is trading near the $43,100 level, and in the last 24 hours, it experienced over 1% upside momentum. If we look at Bitcoin for a longer period, in the last 30 days, Bitcoin experienced a fair 1% upside momentum.
According to expert technical analysis, Bitcoin is currently consolidating in a tight range between $40,000 to $44,000 for the last 6 trading weeks. Although, during the time of Bitcoin ETF approval, we experienced upside momentum till $48,000, but it couldn’t sustain.
However, looking at the weekly chart, if Bitcoin on the weekly time frame closes above $44,500 and sustains above this level, then we may see a bullish move. If Bitcoin on the weekly time frame closes below the $40,000 level, then we may experience a downside momentum.
