Cryptocurrency Analyst Forecasts Bitcoin's Potential Retreat to $38K Based on Technical Indicators

Bitcoin's recent drop to $42,600, triggered by the introduction of spot ETFs in the U.S., has ignited conversations across the cryptocurrency community. A comprehensive study conducted by 10x Research, led by Markus Thielen, delves into the circumstances, indicating a dominant "sell the fact" trend and projecting a potential extension of the market downturn in the immediate future. This evaluation stems from an in-depth analysis of Bitcoin's price dynamics and technical signals.

The study underscores the importance of Relative Strength Index (RSI) divergence in signaling a corrective phase in Bitcoin's behavior. According to Monday's communication to clients from 10x Research, there is a highlighted possibility for the pullback to lose momentum around the dynamic support level of $38,000. The concept of bearish divergence, where prices achieve new peaks but momentum indicators, such as RSI, fail to corroborate, is referenced as a sign of potential fatigue in the upward trajectory.

Even though Bitcoin reached a significant two-year high, surpassing $49,000 recently, the 14-day RSI failed to confirm this milestone, evident in the accompanying chart. The subsequent price decline is interpreted as validation of the bearish divergence. Additionally, the Moving Average Convergence Divergence (MACD) histogram, a tool gauging trend strength and shifts, has descended below zero, indicating a bearish shift in market momentum.

RSI Signals Bearish Divergence as Bitcoin Peaks at $49,000 - First Time Since December 2021 

Markus Thielen, representing 10x Research, directs attention to the decisions made by investors in Grayscale's ETF, the Grayscale Bitcoin Trust (GBTC), as a potential catalyst affecting Bitcoin's market value. The trend among investors shifting towards alternative, low-fee options is anticipated to exert downward pressure on Bitcoin's valuation. Grayscale, charging a 1.5% management fee, is juxtaposed with other asset managers like BlackRock, imposing a mere 0.25% fee. GBTC, initially structured as a close-ended trust and holding a substantial Bitcoin reserve exceeding $27 billion, allowed its shares to become redeemable on Jan. 11, 2013.

Anticipating a gradual shift by investors away from Grayscale's 1.5% annual management fee ETF due to tax considerations, 10x Research envisions a preference for alternatives with significantly reduced fees. The research entity criticizes Grayscale for imposing a 2.0% management fee on a product that, at one point, traded at a 50% discount to its net asset value, resulting in what they perceive as an unjust overcharge for GBTC holders.

The report concludes with an insightful observation from 10x Research, positing that investors are likely to divest their positions before transferring their Bitcoin exposure to another ETF issuer. This potential move is expected to exert additional downward pressure on Bitcoin and persist as a source of concern within the market.

Read More: Unprecedented Dip: Grayscale Bitcoin Trust's Discount Hits 18-Month Low Amid Speculation of Conversion to Bitcoin ETF