Analyst Anticipates Bitcoin’s Price to Plummet by 16% as Profit-Taking Occurs
Bitcoin, the leading cryptocurrency, experienced a surprising decline, dropping to $38,600, its lowest point since early December. This drop can be attributed to the recent introduction of spot Bitcoin Exchange-traded funds (ETFs), which generated a great deal of excitement among investors. Within the last 24 hours, Bitcoin saw a 5.4% decrease, along with a notable 9% decline over the week and a substantial 10% drop over the past month.
The decline was further exacerbated by the aftermath of the U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs on January 10. This approval triggered a classic “sell-the-news” reaction, as investors took profits.
Renowned analyst Ali Chart examined Bitcoin’s historical price movements and discovered a significant correlation with Fibonacci retracement levels. Based on the patterns observed in the past two bull cycles, Chart noted that Bitcoin typically retraced to the 50% Fibonacci level after reaching the 78.6% Fib. Currently, Bitcoin has reached the 78.6% Fib level again, indicating a potential correction. If history repeats itself, Bitcoin could drop to $32,700, aligning with the 50% Fibonacci retracement level.
The ongoing correction in the cryptocurrency market is further complicated by outflows from Grayscale’s Bitcoin Trust (GBTC). A JPMorgan report predicts increased pressure on Bitcoin prices in the coming weeks. Additionally, FTX, a prominent cryptocurrency exchange, has offloaded $1 billion worth of GBTC shares, intensifying selling pressure.
Investor apprehension is amplified by the absence of expectations for a reduction in interest rates by the US Federal Reserve. Without imminent signs of rate cuts, investors are cautious about investing in riskier assets like cryptocurrencies.
However, there is still hope on the horizon with the upcoming Bitcoin halving event in April. This event could potentially support the current market scenario and inject optimism amid uncertainties.
In other news, Bitcoin options ETFs could see approval in just 27 days.