CryptoQuant CEO Unveils Potential Explanations for Bitcoin Price Decline
Bitcoin and the overall cryptocurrency market have been experiencing a series of significant events in recent weeks. It all started with the excitement surrounding the introduction of spot Bitcoin ETFs in the US. However, this was followed by a cooling down of prices and the occurrence of the Golden Cross, leaving investors uncertain about what lies ahead for the leading cryptocurrency.
Amidst the recent dip in Bitcoin’s price, Ki Young Ju, the CEO of CryptoQuant, has provided valuable insights into the current situation, aiming to dispel concerns about Grayscale’s Bitcoin Trust (GBTC). Despite the market turbulence since the introduction of Spot Bitcoin ETFs, Ju suggests that the primary cause behind the dip is not the selling pressure from GBTC, but rather the selling activities in the derivative market.
Delving into the specifics, he advises investors to mirror institutional strategies, emphasizing that BTC’s decline is not directly correlated with GBTC movements. Instead, he points to the derivative market as the key factor influencing the current market conditions. Ju notes that active Over-the-Counter (OTC) markets show no significant impact on prices, indicating that a bullish trend may emerge when on-chain OTC and spot ETF activities decrease, signaling a re-accumulation phase.
Despite concerns about GBTC sales, crypto market specialist Fred Krueger recommends monitoring BTC into new ETFs as a more reliable performance measure. He compares GBTC worries to whales selling BTC and predicts long-term profits for BlackRock, Fidelity, and Bitwise.
Adding to the positive sentiment, Samson Mow predicts that the demand for Bitcoin from various sources, including individuals, corporations, nation-states, and ETFs, will surpass any selling pressure. Mow advises everyone involved in the market to approach it logically and focus on the mathematics behind it, rather than getting upset when prices change rapidly.
The influx of BTC into new ETFs has been considered a key performance indicator (KPI). Grayscale has played a significant role in the crypto space, but recent problems, such as FTX’s $1 billion GBTC selloff due to concerns about bankruptcy, have posed a threat to market stability. Although the initial approval of eleven US Spot Bitcoin ETFs by the Securities and Exchange Commission (SEC) boosted confidence, the market is still facing pressure from Grayscale’s lower trading volume compared to competitors and significant GBTC outflows.
The future remains uncertain as the dust has yet to settle in the crypto space. The SEC’s approval brought temporary optimism, but the crypto community is grappling with the aftermath of Grayscale’s troubles, with some critics labeling GBTC as a “gigantic wrecking ball of toxic waste.”
Despite these challenges, Bitcoin’s price has partially recovered as of January 24, with the cryptocurrency trading at $40,000.06. This marks a 2.55% surge from the previous day’s low of $39,105.51, indicating a tentative return of investor confidence in the market.