The Bitcoin price has experienced a notable decline over the past 48 hours following the green light given to spot ETFs. Prices have exhibited a consistent downward trend, with today witnessing a minor dip below the $43,000 threshold. What factors can be attributed to this downturn in the Bitcoin market? Will the BTC price continue to drop? Will the BTC price crash to $35,000? Let’s take a look at this Bitcoin price prediction article in more detail.
The Bitcoin value has experienced a noticeable decline in recent days. Following the approval of Bitcoin Spot ETFs, there were only marginal fluctuations and downward movements. However, at the commencement of Thursday’s ETF trading, the Bitcoin price briefly surged to $49,000, reaching a level last seen in March 2022.
Yet, by Thursday, the Bitcoin price swiftly retraced its gains. Subsequently, on Friday, there was a significant downturn, plummeting from over $45,000 to below $44,000. In the past 24 hours alone, Bitcoin has incurred a loss exceeding 8%. At the time of writing this, the BTC price is trading at $42,781.
Bitcoin Price Prediction: What are the reasons for the Bitcoin crash?
The recent decline in Bitcoin prices can be attributed in part to substantial sell-offs of shares in the Grayscale Bitcoin Trust (GBTC), according to observations made by Anthony Scaramucci, the founder of SkyBridge Capital. During an interview with Bloomberg Television, Scaramucci highlighted a noteworthy trend of significant selling activity in Grayscale, suggesting that investors are converting their trust shares to the Exchange-Traded Fund (ETF) format.
The recent approval of ETFs by the U.S. Securities and Exchange Commission has spurred a migration towards these lower-fee alternatives, leading to a wave of sell-offs as investors seek to realize losses.
- Established in 2013, the Grayscale Bitcoin Trust achieved a historic milestone on Thursday by recording an unprecedented first-day turnover of $2.3 billion, setting a landmark for exchange-traded Funds (ETFs). Despite being a widely favored vehicle for Bitcoin exposure, shareholders of the trust, grappling with losses, chose to transition to more cost-effective alternatives. This shift occurred in the wake of Bitcoin’s surge to a two-year peak above $49,000 on Thursday, only to see the cryptocurrency undergo a decline, dipping below $43,000 on Friday.
- Transition from Grayscale Trust to ETF: Investors have had the opportunity to acquire a Bitcoin-based financial product with remarkably low fees in recent years. However, following the conversion, competing ETF providers offer more favorable fee structures. Consequently, numerous Grayscale customers are opting to sell.
- Vanguard Boycott: Several financial services companies are boycotting the Bitcoin ETF, with Vanguard drawing particular scrutiny. The restriction on purchasing ETFs, coupled with the ability to acquire other products (potentially after selling Bitcoin financial products), contributes to a bearish market sentiment.
Is FTX Also Responsible for the Bitcoin Sell-off?
Zach Pandl, Grayscale’s Managing Director of Research, has come forward to defend the company’s stance. He asserted that selling one Bitcoin product to acquire another should not exert any influence on the overall Bitcoin price.
On Friday, GBTC shares saw more than 5% decline, closing at $38.57. Despite a remarkable 300% surge in GBTC shares over the past year, Bitcoin’s increase during the same period was nearly 160%, underscoring the trust’s substantial role in various Bitcoin investment strategies.
Notably, Scaramucci introduces another dimension to the recent Bitcoin price decline, pointing to a connection with FTX. He suggests that the insolvency proceedings of FTX have contributed to the downward pressure on the cryptocurrency.
FTX, previously counted among the major cryptocurrency exchanges, declared bankruptcy in 2022 during a widespread market downturn, and its estate is presently in the process of liquidating significant crypto assets.
The ongoing sell-off, combined with the recent endorsement of Bitcoin exchange-traded funds (ETFs), has intensified selling pressure in the market. Scaramucci foresees that the surplus supply, influenced by the selling activities of FTX’s bankruptcy estate, is expected to subside within the next six to eight trading days.
Furthermore, he highlighted a significant development related to the Wall Street promotion of ETFs. The quiet period, characterized by Wall Street abstaining from marketing these ETFs, is set to end in about eight days. This suggests a potential shift in dynamics, as Wall Street gears up to actively promote and market Bitcoin ETFs, ushering in a new phase in the market landscape.
Bitcoin Price Prediction: Will the BTC Price Crash to $35,000?
A minor downturn fell within the expected range of possibilities, and as an investor, such occurrences shouldn’t be overly surprising. Nevertheless, in the upcoming weeks, there is a potential for a substantial surge in the Bitcoin price, propelled by the impact of ETFs.
The possibility of a crash below $40,000 cannot be ruled out. However, it is precarious to engage in speculation regarding a sharp decline in Bitcoin’s value, given the potential for the trend to reverse rapidly and significantly.
During the persistent selling pressure, various support lines emerge as potential brakes to the downtrend, offering a glimmer of hope for the Bitcoin price and its proponents.
While Bitcoin has already surrendered its support at $44,000, another critical threshold at $42,700 presents an opportunity to stave off further decline. If this level proves resilient, Bitcoin can reclaim the $43,000 mark and reverse the prevailing downward momentum.