3 Reasons Bitcoin Hits $38.5K and Is Marked ‘ETF Dip’
Bitcoin (BTC) has hit a two-month low this week, but data suggests that BTC's price may be in the lows.
Data from Cointelegraph Markets Pro and TradingView continue to track the sustained gains in BTC/USD after a move to $38,500.
The dust is settling on the first two weeks of trading for US-based bitcoin exchange-traded funds (ETFs). Outflows from Greyscale Bitcoin Trust (GBTC) appear to be slowing, and overall optimism over institutional selling pressure is gradually increasing.
On-chain metrics are also hinting at “oversold” market conditions, and with Bitcoin now down 20% compared to its local highs, a more sustained BTC price recovery could be on the cards.
However, nothing is certain – even the long-term owners, in the same way as the market trends in the market have behaved this month.
Cointelegraph takes a look at these topics as consensus slowly emerges on whether Bitcoin will ever go down.
GBTC: Light at the end of the tunnel?
When it comes to BTC price trends, the headline of the moment is the United States' top Bitcoin exchange-traded funds (ETFs).
ETFs have led a 20% decline for BTC/USD so far, seeing billions of dollars in inflows since the January 11 launch.
Market participants are linking the event to one ETF: the Grayscale Bitcoin Trust (GBTC). The switch to ETFs has allowed investors to get out of years of being “trapped” — and while they may be able to invest in Bitcoin products elsewhere, rules require a cooling-off period of at least a month.
Pssst,
GBTC cannot print bitcoin.
This sale is very limited and non-sustainable.
— hodlonaut 80 IQ 13%er ⚡ (@hodlonaut) January 23, 2024
Huge chunks of BTC were sent by Greyscale to guardian Coinbase, but critics argue that this has nothing to do with the downward pressure Bitcoin has been seeing ever since.
Instead, they are likely to be blamed for interrupted exchange FTX sales, as well as initial liquidations.
The first is limited and may already be finished – and the BTC/USD lows for this week may remain as the GBTC flows themselves decrease day by day.
NVT simulates a 2022 bear market floor
Bitcoin's on-chain benchmark was a surprise as BTC price dropped to $38,000.
The Advanced Network Value-to-Transaction (NVT) indicator currently shows that the value of recent transactions, taken as a fraction of the total Bitcoin market cap, is similarly low.
The NVT token seeks to compare the total value of transactions over a 90-day return period with the market price of Bitcoin at a given time.
Advanced NVT adds standard deviation bands, helping to detect when BTC is relatively overbought or oversold.
The latest decline has caused a retracement of the lower standard deviation band, suggesting that $38,500 is an unnaturally low price point.
According to Philip Swift, creator of LockIntoBitcoin's on-chain statistics resource, the NVT comedy is Bitcoin's first post-2022 bear market pitfall.
“I'm glad to see the higher NVT drop into green sold bands for the first time in this bull market,” he wrote in a specific X post.
Bitcoin travelers offer “capital tokens”.
When it comes to headline events, this week's lows tested the convictions of both speculative and seasoned consumers.
RELATED: Bitcoin Price ‘Overloaded' $30K Risks More Inflation – Arthur Hayes
On-chain data confirms this: Even long-term holders (LTHs), defined as entities lasting 155 days or more, sent coins to exchanges at a loss.
Long-term holders send us over $430M worth of #Bitcoin at a loss, on January 22nd on a day when #Bitcoin was below $39,000.
Additional capital signs. Intimacy. pic.twitter.com/La2a2GIz81
— James Van Straten (@jvs_btc) January 25, 2024
This is a follow-up move that saw BTC/USD pull back from a two-year high of $49,000 after the ETF launched. Then, it was short-term holders (STHs) who were at the forefront of selling, as much BTC moved for less than what was bought.
Commenting on the volume of activity, James Van Straet, research and data analyst at crypto insights firm Cryptoslate, sounded a cautious tone. LTHs, he explained, may be on the edge of a cliff, where there could still be a more aggressive round of capital.
“This scenario remarkably mirrors the pre-luna collapse seen in May 2022. At that time, the same amount of money was sent to the exchanges at a loss, followed by a more severe loss a week later, reaching more than $600 million, just before the price of Bitcoin fell shockingly below $20,000,” he suggested in a research paper.
“Repetition of these types of losses could indicate evidence of increased capitalization among long-term Bitcoin stakeholders.”
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
