Bitcoin (BTC) has experienced a notable decline of over 5% in its value, currently resting at $42,600, following the debut of spot ETFs in the United States last Thursday. This drop in price action is being interpreted as a classic case of “sell the fact” by market analysts.
While the debut of spot ETFs was eagerly anticipated, the subsequent decline suggests that investors may have been quick to take profits after the news.
RSI divergence signals potential correction
Technical analysis conducted by 10x Research, led by Markus Thielen, points to a potential near-term correction in Bitcoin’s price. According to 10x Research, “Bitcoin’s RSI divergence signals correction,” referring to the Relative Strength Index (RSI) as a momentum indicator.
A bearish divergence is observed when prices reach new highs, but the RSI fails to confirm the trend, indicating potential exhaustion in the upside momentum.
BTC recently reached a two-year high, surging above $49,000; however, the 14-day RSI did not confirm this peak. The subsequent price decline has validated this bearish divergence, suggesting that further downward pressure may be in store.
Another important technical indicator is the Moving Average Convergence Divergence (MACD) histogram, which is used to gauge trend strength and changes. It has crossed below zero, signaling a shift towards bearish momentum in Bitcoin’s price.
Impact of Grayscale’s ETF on Bitcoin price
Markus Thielen of 10x Research also highlights the potential impact of investors in Grayscale’s ETF, the Grayscale Bitcoin Trust (GBTC), on Bitcoin’s price.
GBTC investors are expected to shift their investments to other low-fee options, putting additional pressure on Bitcoin’s price. Grayscale currently charges a 1.5% annual management fee, while other asset managers like BlackRock charge only 0.25%.
GBTC, once a closed-end trust, is one of the largest holders of Bitcoin, with a substantial coin stash valued at over $27 billion. GBTC shares started trading in 2013 and became redeemable on January 11. Investors’ decisions to move their funds from GBTC to other lower-cost alternatives may further impact Bitcoin’s price dynamics.
Questioning Grayscale’s strategy
Notably, 10x Research questions Grayscale’s strategy, stating, “Grayscale is betting that investors will slowly switch out of their 1.5% annual management fee ETF offering (due to tax consideration) instead of choosing other reputable companies that offer 80% less in fees.”
The research firm also highlights the negative news surrounding the parent company DCG and Grayscale itself, including the controversial 2.0% management fee charged on a product that, at one point, traded at a significant discount to its net asset value, potentially overcharging GBTC holders.
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