Analyst: Bitcoin gearing up for a massive pullback
According to YouTube analyst Crypto Banter, Bitcoin technical charts show an incoming fall in the market.
Despite the approval of spot Bitcoin ETFs on Jan. 10, which many recognized as a win for the industry after the first application was submitted 10 years ago, the prices of Bitcoin (BTC) only dropped further, pulling most of the market into the red.
The analyst relates that success should be more money going into BTC than flowing out. In looking at the numbers, while there was $1.2 billion in net inflows in the previous week, at the same time, $579 million flowed out of Grayscale, the biggest holder of BTC in the world with 619,000 coins in their possession.
The analyst concludes the coins have been locked up for a while, but with the new ETF announcements, coins are starting to hit the market.
The analyst says that Grayscale started sending BTC to multiple addresses on Jan. 12 to liquidate the cryptocurrency. With so many sellers trying to exit their positions, the charts showed that GBTC began trading at a 3% discount. The result, the analyst concludes, is a race between the amount of money flowing out of GBTC and into spot Bitcoin ETFs, in which it is likely that there will be a market dump.
Comparatively, the analyst highlights some good news: Ethereum (ETH) open interest went up, suggesting some BTC trade has moved there. Institutions are unwinding their positions. Now, the question is if Bitwise and the other providers can bring in more BTC buyers.
Looking at Bitcoin technical charts on a weekly time frame, the analyst calls out a shooting star pattern, a small-bodied candlestick with a long wick at the top and little to no wick on the bottom, which typically signifies a potential fall in the market.
However, the analyst does compare this chart to the aftermath of the Coinbase IPO, in which a local top was experienced in BTC; the price went down before going parabolic. That said, historically, some pullback would be experienced first.
At the time of writing, Bitcoin was sitting at $42,271, down another 1% in the last 24 hours.
