Why Is Bitcoin Price Trading Sideways? 3 Key Factors
January 18 2024 - 6:00AM
NEWSBTC
The Bitcoin price has been experiencing a phase of stagnation over
the past days, leaving investors and analysts searching for the
underlying causes. Three key factors can be seen as central to
explaining Bitcoin’s current sideways trading trend: #1 ETF Inflows
Are Offset By GBTC Selling, But For How Much Longer? The spot
Bitcoin ETFs continue to be the dominant theme on the market, and
Grayscale in particular, with its GBTC, remains the focus of
analysts. While the ETF inflows continue to be record-breaking, the
Bitcoin price remains flat. One of the main reasons for this is
presumably the outflows on GBTC, which is viewed as overpriced with
its fee of 1.5% per year (compared to 0.25%) by other issuers.
Thomas Fahrer of Apollo pointed out the significant flow
discrepancies in the market: “In three days of trading. IBIT +16K
BTC, FBTC +12K BTC, BITB +6.7K BTC, ARKB +5.3K BTC, GBTC -27K BTC.
GBTC BTC is flowing but not enough to sustain the other ETFs.
Supply shock inbound imo.” Alessandro Ottaviani provided further
insights, stating, “Bitcoin inflow in the ETFs: +47k, Bitcoin
outflow from Grayscale: -27k, net inflow: 20k. […] Soon or later I
expect Grayscale outflow stopping or reducing significantly. Those
who have Grayscale GBTC were already into Bitcoin and therefore I
think they already made the decision to sell, the execution of
which should happen not so much later than the launch of the ETF.
Related Reading: Bitcoin Gives Early Top Warning Signal, But Price
Could Double First Bloomberg analysts James Seyffart and Eric
Balchunas expect a portion of GBTC outflows to migrate to other
Bitcoin exposures, highlighting the complexities of fund accounting
and settlement delays in tracking these movements. They noted,
“GBTC has crossed $1.1 billion in outflows…We expect a meaningful
percentage of those assets to find their way back into Bitcoin
exposure, mostly other ETFs.” #2 Bitcoin Miners Sell Ali Martinez
has spotlighted the intensified selling activity by Bitcoin miners
as another factor influencing the current price stagnation. Recent
on-chain data indicates that miners have significantly increased
their Bitcoin sales. Martinez commented on X (formerly Twitter),
“Bitcoin Miners in Selling Mode: Recent on-chain data from
Cryptoquant indicates a substantial increase in selling activity by
BTC miners.” Notably, the shift in miner behavior is consistent
with historical trends, where miners sell their holdings to manage
cash flow or capitalize on price increases during market rallies.
#3 Consolidation Phase Following ETF Mania The market is currently
undergoing a consolidation phase after the euphoria surrounding
Bitcoin ETFs, which led to an 82% rally. Such a phase is considered
natural and mirrors historical patterns seen in other markets, like
the first gold ETF. Related Reading: Bitcoin On Thin Ice: Peter
Schiff Warns Impending SEC Regulations Could Tank Prices Although
gold initially recorded an increase of around 6%, it then took a
full nine months to start the actual rally, which almost quintupled
the price. The same goes for the Bitcoin ETFs. It will take some
time before the marketing machine of the asset managers starts up
and new institutional investors can be convinced of the new asset
class. Analyst Skew provided a technical perspective, stating, “BTC
4H: Remaining flexible till trend confirmations, however not
looking good for the bulls without 4H 200EMA reclaim & RSI
below 50. Yearly open [is] still very important for overall
risk-reward. Above is good with bullish confirmations. Below is bad
for risk & with bearish confirmations leads to downtrend (hedge
mode). Pivotal area for 1H – 4H trend ~ $42.5K” At press time, BTC
traded at $42,684. Featured image created with DALL·E, chart from
TradingView.com
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