Bitcoin Prices May Retest Lower Support Amid ETF Hype Unwinding

According to CryptoPotato, a Matrixport Research analysis report suggests that Bitcoin prices may retest lower support around $36,000 to $38,000 if ETF hype fully unwinds. However, this would present buying opportunities for investors, according to Markus Thielen, Head of Research at Matrixport. He stated that any further dip could be used to start buying again. A correction to $36K would be in the magnitude of around 26%, but CoinGlass predicted that it could be as much as 30%, which is similar to mid-cycle retracements from previous cycles. This would send prices back to the $34K level before they resumed an uptrend.

Thielen also noted that the recent launch of spot Bitcoin ETFs has been underwhelming so far, with lower-than-expected demand and declining trading volumes. Grayscale has been offloading BTC since the rival ETFs were launched on Jan. 11, shedding 106,575 BTC worth around $4.27 billion so far this month, according to the ETF holdings tracker provided by CC15Capital. GBTC holders appear to be selling and taking profits after Bitcoin’s rally in late 2022 rather than moving into the new ETFs, reducing expected ETF inflows.

In addition to the Grayscale selloff, Bitcoin miner reserves have been decreasing since October, according to CryptoQuant. Miners typically sell before a halving event to lock in higher prices and accrue cash reserves to invest in more efficient hardware. This enables them to keep up with competitors after the block reward is halved, which is estimated to occur on April 22. Nevertheless, Thielen believes there is no reason to be bearish, stating that the macro environment will remain a tailwind in 2024, and the US election cycle will see a constructive fiscal response that will lift asset prices higher. BTC prices had reclaimed the $40K level during the Asian trading session on Friday, Jan 26.