This Bitcoin (BTC) potential is low, according to technical: 10x research

With bitcoin down more than 7% to $41,600 since the launch of spot ETFs in the United States on Thursday, analysts at 10x Research are warning that a classic “sell fact” price action is imminent.

The report, led by Marcus Thielen, issued a note of caution, suggesting that the sell-off may be sustained in the near term, suggesting that the $38,000 support level may be reached.

Bitcoin fell following the launch of the first Bitcoin ETF

Bitcoin's fall follows high expectations for real earnings following the approval of ETFs. Bitcoin initially rallied above $49,000, aligning with investors' predictions of a breakout triangle and 2-3-year moving average, often seen as resistance.

10x Research highlighted a triangle pattern in a December 29 note, predicting a +/- 10% move in either direction. Although the market experienced a rally, the pattern now shows the possibility of a rebound.

The technical analysis by 10x Research shows a bearish divergence indicated by Bitcoin's Relative Strength Index (RSI). The RSI divergence combined with a decline of more than 5% has raised concerns about a correction in the market.

Moving Average Dependent Divergence (MACD) histogram crossing below zero is more supportive of a bearish reversal.

The report draws attention to historical precedents, noting that BTC has seen significant rebounds following key events such as the December 2017 launch of Bitcoin futures, the listing of Coinbase in April 2021, and the October 2021 ETF futures.

Analysts at 10x Research say these historical patterns indicate a risk of market weakness.

Grayscale ETF shifts may add to downward pressure.

Thielen also said that investors in Grayscale's ETF, the former Grayscale Bitcoin Trust (GBTC), could put pressure on the price of Bitcoin by switching to low-fee options. Grayscale has a 1.5% management fee, while competitors like BlackRock only charge 0.25%.

Thielen emphasized that grayscale investors' decision to bet on the offering will gradually increase and affect the price of Bitcoin.

Additionally, he highlighted the concerns surrounding Grayscale and its parent company DCG, citing negative news on the product, which once traded at a 50% discount to its net asset value, and a history of charging GBTC holders with a 2.0% management fee.

On a 10x basis, investors can move their Bitcoin holdings before moving to a different ETF provider, which will have a lower impact on BTC and create a sustainable risk.