With DXY strength, Bitcoin price recovery is at risk due to GBTC selling.
Bitcoin traders are reeling from the current (BTC) selling price as the recently launched Bitcoin ETF failed to raise the desired price. Aside from the constant withdrawal of GBTC affecting the price of BTC, market participants are now facing another problem: the strong US dollar.
The recovery of the US dollar at a high speed
The U.S. dollar index (DXY), which tracks the greenback's performance against a range of major foreign currencies, rose 2.71 percent from a Dec. 27 low of 100.617 amid encouraging U.S. economic data.
Retail sales, the Philly Fed manufacturing index and weekly initial jobless claims all provided tailwinds for the USD index, which rose to a new 2024 high in the 103.65-103.70 range.
According to data from the US Census Bureau, In December 2023, retail sales were recorded at 0.6% growth compared to expectations of 0.4% and 0.3% from the previous period.
The dollar's recovery was attributed to a rebound in U.S. commodities. All these bets are off, and the Federal Reserve (Fed) may start cutting interest rates as soon as March.
From a technical perspective, the US Dollar Index looks poised to rally above 1.12% as a classic V-shaped recovery pattern forms.
If the DXY successfully breaks above the 104.56 neck, chances are high that it will recover to 107 in the next few months.
Massive GBTC withdrawals affect the price of BTC
Since the launch of Bitcoin ETFs on January 11th, there has been significant inflows from the Grayscale Bitcoin Trust (GBTC). As a result, Greyscale has shed a large number of Bitcoins as GBTC holdings. About 38,000 BTC was withdrawn from GBTC on January 11 after switching to a spot ETF.
30,496 #Bitcoins have been purchased since the ETF launched.
Excluding $GBTC (which sells at a higher premium than others), the 9 ETFs bought 68,442 $BTC – a surprisingly large number.
Only 900 #Bitcoin are mined daily (dropped to 450 in April)
— CC15Capital (@Capital15C) January 18, 2024
There was $484 million in withdrawals from Greyscale on Friday alone as GBTC holders capitalized on open redemption options.
UPDATE: @Grayscale's $GBTC appears to have seen $484 million in outflows today. @ARKINvest/@21Shares' $ARKB sees $42.5 million in revenue. @BitwiseInvest's $BITB flat is live today. You don't have the information on the others yet. Total from $GBTC is now ~$579 million pic.twitter.com/Ocuw9eHaHs
— James Seyff (@JSeyff) January 13, 2024
In a recent statement, renowned economist and gold bug Peter Schiff pointed out that despite the acceptance of the spot Bitcoin ETF, the BTC price is not increasing due to the outflow from the grayscale GBTC product. Although the total amount of revenue is large, he mentions that it has limited impact on the BTC market as a whole.
The reason investors are buying the new #BitcoinETFs that haven't boosted the price of #Bitcoin is that the outflows from selling $GBTC and #BTC are greater than the combined income of the other ten Bitcoin ETFs. Once the initial demand for ETFs subsides, I expect further price declines.
— Peter Schiff (@PeterSchiff) January 17, 2024
RELATED: Bitcoin trader who calls $48K BTC price high shows new bearish signal
Bitcoin price may return to $34,000.
Independent market analyst Ali pointed out the movement of the price of BTC in a parallel channel from the end of 2022. According to Ali, Bitcoin's current correction is due to rejection of the upper border of the channel at $48,000.
This parallel channel appears to be true! This shows that #Bitcoin has experienced a rejection from the upper border of the site at $48,000 and now $BTC has returned to the lower border at $34,000 and will return to the upper border at $57,000. pic.twitter.com/fBiNsmJ10C
— Ali (@ali_charts) January 13, 2024
The analyst expects a rebound for Bitcoin, targeting a drop to the lower bound of $34,000.
However, market intelligence firm Centimet said the market remains optimistic about the long-term impact of the Bitcoin ETFs space, which was approved by the US Securities and Exchange Commission on January 10.
The company posted the following chart on X's social media,
“However, the #FOMO surrounding the approvals has helped drive #crypto higher domestically, as many experts believe that the foregone conclusion of these approvals is ‘baked in' to market prices at the time of the announcements.
After bitcoin experienced a 16.9% drop from $49,000 to $40,600 last week, Santiment said the narrative around these ETFs could shift to “associating them with words like #scam or #ripoff or #risk.”
If bearish sentiment emerges on the subject that initially drove prices higher from October to December, sentiment may trigger fear, uncertainty, and doubt (FUD) in a series of sales from novice traders.
Until December, this #FUD and the inevitable sell-off from novice traders will allow the market to bounce back from patient opportunists who continue to accumulate at these low price levels. https://t.co/82igfnpKHS
— Santiment (@santimentfeed) January 19, 2024
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.
