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- According to analysis, here are three probable reasons why Bitcoin’s (BTC) price could still decline to $35,000.
Recent actions by BitMEX cofounder Arthur Hayes indicate that he expects Bitcoin to drop below the $40,000 threshold, as shown by his acquisition of put options with a strike price of $35,000 set to expire on March 29.
This forecast corresponds with technical analysis that highlights Bitcoin’s difficulty in sustaining its position above essential support levels.
The reasoning behind this pessimistic view can be broken down into three main factors:
See Also: ORDI Dropped 15% After Bitcoin Plunged Below $40k
U.S. Treasury quarterly refunding announcement:
Set for January 31, this event is crucial as it may impact liquidity in financial markets, influencing risk assets like Bitcoin.
Options market activity:
Hayes’s options acquisition reflects a calculated wager on Bitcoin’s downturn, indicating a lack of faith in the digital asset’s short-term outlook.
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Grayscale’s selling activity:
Grayscale has been liquidating BTC to pay back investors leaving the GBTC fund. Previously, GBTC shares were redeemed in USD without liquidating the underlying BTC, a practice that has changed following the approval of the spot ETF.
The alteration in Grayscale’s strategy arises from two factors:
High management fees: Grayscale’s annual fee of 1.5% is considerably higher than those of other ETF providers, leading investors to pursue more economical options.
GBTC discount closure: Investors who bought GBTC shares at a 40% discount are taking advantage of the chance to exit at a break-even point.
The ongoing liquidation by Grayscale is projected to exert downward pressure on Bitcoin’s price in the near term.
Nonetheless, this period is expected to be temporary, lasting a few weeks as the market adapts to the shift in investments from GBTC to lower-fee ETFs.
See Also: Bitcoin Whales Sold $3 Billion in BTC, Is Another Price Plunge Coming?
While the short-term outlook for Bitcoin may seem grim, with the potential of falling to Hayes’s anticipated levels, the fundamental characteristics that distinguish Bitcoin as an asset class remain intact.
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