Bitcoin’s poor performance since the approval of spot ETFs has impacted most investors’ optimism.

A close below $40k this week will signal more short-term weaknesses amid heightened selling pressure.

Bitcoin’s performance in the past two weeks has similarly impacted the altcoin market.

Bitcoin’s (BTC) price has continued to hang around $40,000 in the past three days despite the heightened on-chain activity. With more than $3.75 billion worth of Bitcoin options set to expire today, more volatility should be registered over the weekend as investors realign their portfolios. Notably, Bitcoin’s short-term holders and miners have been offloading their holdings in the recent past as the spot BTC ETF approval in the United States turns out to be a classic sell-the-news event. Furthermore, Grayscale’s GBTC has been the largest source of selling pressure in the past two weeks, thus weighing heavily on the crypto-bullish sentiment.

Closer Look at Bitcoin On-chain Analysis

less being liquidated in the last 4 days alone. History tells us that this is typically a sign of capitulation, which can lead to a market price bounce until smaller traders begin to get optimistic toward #crypto as an investment vehicle once again. The disappointment

(Cont) 👇

— Santiment (@santimentfeed) January 26, 2024

As the United States government prepares to liquidate Bitcoins, which were acquired from the Silk Road seizure, worth $130 million, on-chain data shows small wallet holders have been getting impatient and accelerated their selling pressure. According to market intelligence platform Santiment, more than 487,000 Bitcoin wallets that held 1 BTC or less liquidated their positions in the past four days alone. Additionally, Bitcoin wallets with a balance of between 1 and 1k registered a decline of 4,752 wallets in the same period. Ideally, Santiment concluded that a decline in Bitcoin wallet holders signals an early sign of market capitulation.

Price Analysis and Short-Term Expectations

Bitcoin price has been on a falling trend since the approval of spot BTC ETFs in the United States on January 11. With heightened short-term selling pressure, Bitcoin price will fall toward the support level of around $38k. If the Bitcoin bulls fail to hold on to the support level around $38k, the next support range will be between $32,000 and $36,000 according to the weekly auto-fib extension. Meanwhile, a double-top reversal pattern is on the cusp of being confirmed if Bitcoin price closes consistently below $40k in the coming weeks.

SOURCE