The price of Bitcoin continues to plummet, and it is currently below $40,000. And unfortunately, it continues to take the rest of the market with it.
The price of Bitcoin is continuing to the downside, and it looks like there aren’t any signs of it slowing down. The decline seems persistent, hovering around $38,000-$40,000. This article aims to explain the factors influencing this downturn, particularly for newcomers or those concerned about daily fluctuations in the crypto market.
In this article, we are going to discuss why that is happening, how far we can go, and when we might turn around.
1. FTX
As recently reported by my colleague, FTX has dumped 22 million shares of their Grayscale Bitcoin Trust (GBTC), totaling about $1 billion — that accounts for half of the outflows of the GBTC shares.
Under the FTX bankruptcy proceedings, the now-bankrupt exchange was finally able to liquidate those positions because Grayscale’s Bitcoin trust was recently converted into an exchange-traded fund (ETF), prompting them to exit and liquidate their holdings.
Read: Breaking News: FTX Dumps $1 Billion Grayscale Bitcoin ETF
2. Mt. Gox
FTX is not the only bankrupt exchange that is going to continue the downward pressure on the crypto market. Another factor is the Mt. Gox bankruptcy. This defunct exchange still holds about 200,000 Bitcoins, soon to be released to former users.
However, the repayment plan is going to be in stages, but this does not necessarily mean that all of these Bitcoins will be flooded onto the market because most of these people might want to hold on and wait until the top of the bull market before they sell.
Interestingly, many Mt. Gox users bought Bitcoin at much lower prices (some at $1000), and they might be inclined to sell for a profit.
Read: Mt. Gox Creditors Are Finally Getting Their Money Back – Details
3. US Government
The US Government is currently in control of 100,000 Bitcoins from their seizures of the Silk Road case. And the last time they announced anything about those seized Bitcoins was way back in July 2023 — currently, we do not have any updates as to their plans for selling those Bitcoins, which could be a potential sources of FUD in the coming months or years.
Read: What Do The US Government And Whales Know About Bitcoin That We Don’t?
Can Bitcoin Go Lower?
Fortunately, it looks like we do have a bit of a bullish divergence indicated by this higher low on the RSI and a lower low for the Bitcoin price — this could see us having a short-term relief rally that could take us up to a level of support turning it into resistance.
However, we still have not played out this bearish flag yet that coincides a price target of roughly $36,000-$34,000. A possibility would be that we will have a slight rally before turning into a bull trap, then continue to the downside.
Final Thoughts
Regardless of the selling pressure and FUD from all these large entities, it is best to acknowledge that the crypto markets do not go up in a straight line forever, and there are going to be retracements and pullbacks along the way, representing opportunities to add to your portfolio and multiply your wealth.
What you can surmise from all of this information is that the selling pressure cannot continue forever. Eventually, BlackRock’s inflows and all these other ETFs that people are pouring money into will overpower the selling pressure. And whenever that happens, we are going to go parabolic again.