Sell the news? Bitcoin drops from $67K to $62K in just a day as BTC ETF hype fades

, Sell the news? Bitcoin drops from $67K to $62K in just a day as BTC ETF hype fades
“wall street subway STOP” by eschipul is licensed under CC BY-SA 2.0

YEREVAN ( — A recent price rally in the Bitcoin (BTC) market that saw it climbing to record highs above $67,000 faltered Thursday, raising expectations of additional selloffs on Friday and during the coming weekend session.

The BTC/USD exchange rate fell to as low as $62,100 on Thursday before correcting to above $62,800 hours later. So it appears, most traders decided to lock their profits at the record high level, thereby outrunning the number of upside bids and leading to a bearish correction.

BTC/USD 4H price chart. Source: TradingView
BTC/USD 4H price chart. Source: TradingView

Additionally, the downside move may also have appeared due to an overbought relative strength index (RSI) that typically prompts traders to reduce their bullish exposure in the market. In Bitcoin’s case, the four-hour RSI was 76.27 before the price correction took place.

Related: Another reason why Bitcoin reached $67K: A Gold Exodus

Bitcoin rallied over 38.50% month-to-date to reach $67,000, primarily due to the hype surrounding the launch of the first BTC-enabled exchange-traded fund (ETF) in the U.S. Speculators raised their spot bids amid anticipation that the ProShare Bitcoin Strategy ETF would amass massive capital inflow from institutional investors, thus raising prospects of the further BTC adoption on Wall Street.

The ETF opened with record numbers, with about $981 million of shares changing hands over its debut session, making it the second-largest ETF opening ever, according to FactSet direct of ETF research Elisabeth Kashner. A day later, spot BTC reached its record high.

BTC ETF skepticism

The price started falling after some analysts expressed skepticism about the Bitcoin ETF’s potential to affect BTC spot rates positively.

“It may also lead to many investors pulling money from Bitcoin wallets and transferring it to the new ETF [to] have exposure via a product that is endorsed by the SEC and the New York Stock Exchange,” said Kevin George, author of Global Markets Playbook in his Seeking Alpha coverage, adding:

“This will lead to a net effect, rather than [a] new stimulus for the crypto market.”

Robert Armstrong of the Financial Times rubbished the concept of a Bitcoin derivatives ETF itself, underscoring that the chances of it performing better than a real Bitcoin are low.

Related: A $100K Bitcoin looks possible as VanEck prepares to launch BTC ETF next week

He explained that ProShares Bitcoin Strategy offers an expensive way to seek exposure in the BTC market. The ETF’s annual fee is 1%. Atop that, it draws its exposure from short-term bitcoin futures contracts to the changes in BTC’s price. That means ProShares would need to sell their expiring contracts and purchase new ones regularly.

“Because the longer-term contracts are usually more expensive than the shorter ones, rolling the contracts over creates a drag on performance that, it has been estimated, could run to 5-10% annually.”

Armstrong added.

Pain or gain ahead?

Technically, Bitcoin is asking for a further price correction.

BTC/USD daily price chart featuring Ascending Channel pattern. Source: TradingView
Bitcoin daily price chart featuring Ascending Channel pattern. Source: TradingView

The cryptocurrency’s latest pullback originated at a rising trendline resistance that constitutes an Ascending Channel pattern. Based on previous actions, the price looks poised to continue its selloff ahead and fall through a set of support levels presented via the Fibonacci retracement graph between around $52,300-swing high and circa $40,000-swing low.

Related: Bitcoin analyst predicts BTC price crash to $50K in Q4 despite $100K consensus.

Bitcoin’s next support line is near $60,000, also a psychological floor for traders. A breakdown below would risk sending the crypto to around $53,500, coinciding with the 50-day exponential moving average (50-day EMA; the velvet wave in the chart above).

Conversely, a rebound from $60,000 would enable BTC to approach $72,000 as its next upside target.

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