The risk of Bitcoin falling to $38,000; What was the reason for the recent price drop?

Bitcoin has faced significant selling pressure from its providers, including Grayscale Bitcoin Trust, the largest institutional investment fund based on the digital currency, as investors turn to new spot ETFs.

To Report After the BTC/USD pair lost 20% from its January (Dec) high and increased liquidated trading volume, some traders expect the current bearish trend to continue for a while longer, according to Cointelegraph.

Arthur Hayes: More losses to come

Arthur Hayes, the former CEO of the Bitmax exchange, summed it up after the price of Bitcoin fell to $40,000:

There are still more losses to come…

Keith Alan, one of the founders of Material Indicators, published a chart of long and short signals from one of his platform’s proprietary trading tools, warning that if buyers fail to push the current price above the $40,000 range, can expect the price to drop to $38,000.

The graph that shows the liquidity volume of buy orders for the Bitcoin/Tether pair on the Binance exchange shows the interest of the buyers in a range slightly lower than the current price and the absence of sellers up to the range of $44,000.

Material Indicators also points to a group of Bitcoin whales whose continuous purchases have reached $800 million over the past month.

Creating selling pressure to withdraw capital from GBTC

Charting the current flow of capital among nascent spot ETFs, Bloomberg Intelligence analyst James Seyffart noted that there is still a challenge for Grayscale Bitcoin Trust to sell bitcoin.

By selling a total of $640 million worth of bitcoins through the day, the fund defied all previous signals of a slowdown.

However, Seyfart pointed to increased inflows into other ETFs, notably BlackRock’s iShares Bitcoin Trust, which saw $272 million inflows on the day. He noted:

The amount of capital invested in Bitcoin ETFs is significant. More than $2 billion coming in today. Grayscale Bitcoin Trust still accounts for just over half of that figure. The total trading volume of ETFs was equal to 19 billion dollars in only 7 trading days.

Of course, popular social media analyst MartyParty hopes to improve the trend. He said on January 21 that spot ETFs should sell off now as the initial jitters after the launch give way to a more steady uptrend.

Publishing the liquefaction data from the analysis platform of that cryptocurrency, he added:

With the price increase to $42,500, about $2.135 billion of short positions will be liquidated.

Martiparti noted:

Binance will focus on creating leveraged selling pressure fueled by retail traders and new institutional buyers.