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Post-SEC Sell-Off Continues
The reversal lower in Bitcoin continues on Friday with the futures market now down almost 18% from YTD Highs. While many have simply written off the post-SEC reversal as mere profit taking and a ‘buy the rumour, sell the news’ mentality taking hold, there are some other dynamics at play here.
Bitcoin Redemptions
Grayscale Investments had been offering investors OTC-traded shares in its Bitcoin Trust well ahead of approval (as far back as 2017), giving traders the opportunity to get in at a significant discount ahead of a spot-ETF eventually being approved. With that approval now in place, those early investors finally have an opportunity to cash in and many have with total outflows so far totalling almost $2 billion. Indeed, data from Bloomberg this week shows that Grayscale Bitcoin Trust redemptions this week exceeded inflows across all current spot-Bitcoin ETFs.
Bullish 2024 View
Despite the current pullback, there is plenty of reason to remain bullish on Bitcoin longer term. An expected shift in Fed monetary policy this year, the upcoming Bitcoin halving event and greater institutional and retail demand through the year offer a combined layer of support for Bitcoin. Once the current transitional phase has worked itself out and the market reaches and equilibrium point in terms of current redemptions and outflows, demand is likely to start to creep in at lower levels, offering a base for the next move higher.
Technical Views
Bitcoin
The reversal lower in Bitcoin has seen the market trading back down to retest the broken bull channel highs and the 40345-level support. This is a key area for bulls to defend. Should we break below here, however, focus turns to 37030 support next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.