Bitcoin ($BTC) has experienced a more than 5% drop, reaching $42,600, since the introduction of spot ETFs in the U.S. last Thursday, showcasing what appears to be a classic case of “sell the fact” price action.
According to analysis conducted by 10x Research, led by Markus Thielen, the ongoing sell-off may persist in the short term. The research notes that Bitcoin’s Relative Strength Index (RSI) divergence signals a correction, suggesting that the pullback could find support around the dynamic level of $38,000.
RSI divergence occurs when prices reach new extremes, but momentum indicators like the RSI fail to follow suit, indicating potential exhaustion in the upward movement. Last week, despite Bitcoin hitting a two-year high above $49,000, the 14-day RSI did not confirm this, as shown in the chart. The subsequent price decline has validated the bearish divergence. Additionally, the Moving Average Convergence Divergence (MACD) histogram, used to assess trend strength, has crossed below zero, indicating a bearish shift in momentum.
Markus Thielen suggests that the decision of investors in Grayscale’s ETF, the Grayscale Bitcoin Trust (GBTC), to switch to other low-fee options may exert downward pressure on Bitcoin’s price. While Grayscale charges a 1.5% fee, other asset managers like BlackRock charge only 0.25%. The GBTC, previously a closed-ended trust, holds a substantial amount of Bitcoin, with assets exceeding $27 billion. GBTC shares, which began trading in 2013, became redeemable on January 11.
According to 10x Research, Grayscale is betting on investors gradually moving away from their 1.5% annual management fee ETF due to tax considerations. However, the research notes the negative news surrounding Grayscale, including charging a 2.0% management fee on a product that, at one point, traded at a 50% discount to its net asset value, potentially overcharging GBTC holders.
“Investors will likely sell before transferring their BTC exposure to another ETF issuer, causing downside pressure for Bitcoin and remaining a lingering concern,” adds 10x.
