Bitcoin’s value continues to go down, dipping below the $40,000 mark, and market analysts call this slump to Grayscale’s persistent liquidation and substantial Bitcoin sales. Grayscale has been a critical player in this trend since spot Bitcoin ETF trading was initiated on January 12.
According to data from Arkham Intelligence, Grayscale’s selling spree is evident in additional transfers of 8,593,075 BTC (approximately $335.19 million) to Coinbase, supplementing the previously reported 69,994 BTC ($2.9 billion) transfers. These developments have significantly impacted Bitcoin’s price, marking a substantial 20% decline over the past week and a half.
Bitcoin Price Downtrend continues
On Tuesday, Bitcoin’s price hit a low of $38,500, exerting considerable pressure on a crucial support level. However, the $38,500 support has demonstrated resilience, with Bitcoin bouncing back to $39,300 at the time of writing.
Despite this recovery, uncertainties linger regarding the duration of Grayscale’s selling spree. If negative market sentiment persists, Bitcoin could potentially revisit the $30,000 mark, slightly above the pivotal $29,000 level that marked the starting point of the bull run leading Bitcoin to its 22-month high of $49,000 on January 11th.
How Low Will Bitcoin Price Drop?
Notably, the current market trend reflects an increasing influence of bears, with a critical focus on the $38,500 threshold. If this level succumbs to Grayscale’s selling pressure, attention should turn to the $37,750 as the next resistance.
If it fails to maintain above this point, it might lead to a potential decline toward the significant resistance at $35,600, acting as a defense against a dip to the next support level at $33,000. Bitcoin could face further challenges in a sustained downtrend, with critical levels for potential bullish momentum between $29,000 and $30,000.
A breach below these levels may signal a shift in the current bull market structure, potentially giving bears an advantage in the mid-term, at least until the anticipated halving event in April.
Can Halving Event Reverse the Bear Trend?
On top of this, it is quite noteworthy that halving events have historically acted as major catalysts for Bitcoin’s price, and their impact has been evident in the market. With the bearish clouds hovering over the Bitcoin price ahead of the halving, an extended descending trend is possible.
The past cycles have witnessed more than a 50% drop during the halving; hence, a similar price action may be expected. The upcoming days and weeks will determine whether Bitcoin can reclaim its bullish momentum or succumb to further downward pressure.
