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Bitcoin Market Analysis: Analyst Uncovers Key Patterns And ETF Influence

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Crypto Rover, a popular crypto-analyst, recently shared his insights in a YouTube video and analyzed the situation with Bitcoin and the reasons for the price drop. The analyst insights focus on the key trends, the effects of Ethereum and Bitcoin spot ETFs, and the large sell-off by Mt. Gox to help give a richer picture of the market today.

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Crypto Rover highlighted that the current price drop of Bitcoin could be due to a large transaction of Mt. Gox in sending 37,000 Bitcoins to an unknown address which may be to repay customers. This large action has led to more fluctuations in the market which has seen Bitcoin decrease in value. Nonetheless, Rover is still optimistic with the current situation, especially when taking into account the history of BTC and common trends.

Bitcoin Outflows Amid ETF Surge

The analyst explains the subject of the Ethereum spot ETF, which experienced a $106 million inflow on the first day alone. On the other hand, BTC had outflows worth of around $78 million. This divergence shows that there is a dynamic in the market and that sentiment around Ethereum is changing.

Furthermore, the analyst explains the technical setups that are developing in Bitcoin’s price chart. He outlines placing stop at the break of the first bar after a high volume candle and the second bar and targets the symmetrical triangle and the falling wedge, which are bullish reversal patterns. In his opinion, these patterns indicate that Bitcoin will most likely break out at the current resistance levels.

Analyzing the one-hour frames, the cryptocurrency is still trading in the context of a descending resistance level and has a distinct support level on the opposite end. A move through this level could lead to a sharp appreciation of the pair. 

Bitcoin’s Bullish Divergence

Also, Crypto Rover notes a concealed bullish divergence on the four-hour chart where the Relative Strength Index is making lower lows while the price is making higher highs which also supports the bullish view.

The analyst reaffirms his optimistic view on Bitcoin’s future and decides to keep his trades and set the new target at 72K. He observes that this is not the first time such a phase of consolidation has occurred before a major rally and this strengthens his view that the current downturn is just a correction in the backdrop of an upward trend.

Rover also points at what he considers as high volatility in the market, with about $10 billion in short positions in Bitcoin ready to be liquidated should BTC trading price reach $72,000-$73,000. These short liquidations could therefore be a cause to magnify any upward pressure, thus increasing prices.

Crypto Rover remains rather optimistic in the case of further developments with such a significant inflow into the Bitcoin spot ETF since January 2024 that has amounted to $17.5 billion. He has an outlook that as the interest in these ETFs persists and Ethereum gains market share, the rest of the crypto market stands to benefit.

Race Is On As Hong Kong Eyes Ethereum ETF Launch Before The U.S.

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Local media reports indicate that around 10 financial institutions in Hong Kong have plans to apply for Bitcoin spot ETF listings. Additionally, Ethereum spot ETFs are under active discussion as the region aims to enhance its position in the global crypto market.

This news comes about two months after the first Bitcoin spot ETFs launched in the United States to overwhelming demand. Those products have seen over $6 billion in net inflows, with total assets under management exceeding $50 billion. 

While Hong Kong opened applications for Bitcoin spot ETFs in late December, no related products have hit the market yet. Some insiders suggest this lack of Asian crypto ETFs puts regional investors at risk of being “carried” by U.S. capital inflows. They hope Hong Kong can rapidly launch spot ETFs, derivatives, and other trading products.

Ethereum ETF: A Game Changer for Hong Kong

Significantly, sources reveal intensive preparation around an Ethereum spot ETF for Hong Kong. If this product can launch before a similar U.S. offering, it could propel Hong Kong from a follower to a leader in the crypto space.

The success of the U.S. Bitcoin ETFs is clear, with cumulative net inflows reaching $2.24 billion last week alone. This demand drove Bitcoin prices to new highs above $70,000 on Friday. The top three ETFs – GBTC, IBIT, and FBTC – now manage over $27 billion, $12 billion, and $8 billion in assets respectively.

Riding Bitcoin’s momentum, Hong Kong’s two Bitcoin futures ETFs also hit new highs recently. The Southern Bitcoin ETF (3066) peaked at HK$27.5, up 2.5x from its listing price. The Samsung Bitcoin ETF (3135) reached HK$26.8, over double its IPO level.

Weng Xiaoqi, CEO of HashKey Exchange, commented on the importance of Hong Kong establishing crypto ETF products. He noted the rapid growth is largely driven by U.S. institutions, leaving Asian investors to potentially “lift the sedan chair” by buying in later at higher prices.

HashKey is working to list Hong Kong spot ETFs and derivatives as soon as possible. Weng believes having these products will attract substantial capital inflows, establishing Hong Kong as a premier crypto gateway in Asia.

While awaiting regulatory approval, Weng expects the first batch of Hong Kong Bitcoin ETF listings may number below the 11 approved in the U.S. He stressed that an Ethereum spot ETF launch ahead of the U.S. could be transformative for Hong Kong’s crypto market status. Nevertheless, the ability to promote these innovative products early could significantly enhance the region’s position in digital assets.

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Bitcoin’s Bleeding: 11% Plunge Erases New Year Gains, Dips Toward $40k Zone

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The price of the world’s leading cryptocurrency, Bitcoin, has taken a nosedive, plunging 11% in a weekly chart that now hovers dangerously close to the $40,000 zone. This stark reversal erases all the gains made during the promising early weeks of 2024. The slump comes in the wake of the much-anticipated approval of Bitcoin spot ETFs by US securities regulators just a week ago.

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Source: Coinmarketcap

Bitcoin Spot ETF Approval Fails to Boost Prices

Since the commencement of spot Bitcoin ETF trading on January 11, the digital currency has experienced a significant setback, plummeting 6.6% from its lofty heights of nearly $49,000 to the current value of $40,993.46 at the time of reporting. This unexpected turn of events is raising questions among crypto enthusiasts, particularly those who had heralded spot ETFs as a watershed moment for the crypto market.

One plausible explanation for this downturn revolves around the Grayscale Bitcoin Trust (GBTC), a publicly listed Bitcoin warehouse that played a pivotal role in advocating for the legalization of US spot ETFs. GBTC, which had been operating as a Bitcoin lobster pot since 2017, converted to an ETF last week, allowing backers their first chance to reclaim the approximately $28 billion worth of BTC it had accumulated.

However, in the four days following spot ETF approval, GBTC has witnessed redemptions exceeding $1.6 billion. Analysts suggest that this might be a result of investors cashing out rather than reallocating their assets to cheaper ETFs. The situation is further complicated by the fact that GBTC investors, who had previously bought the fund at a significant discount to NAV in anticipation of its eventual ETF conversion, are now taking full profits by exiting the BTC space altogether.

Industry experts, including JPMorgan analyst Nikolaos Panigirtzoglou, predict that an overhang from these previously trapped GBTC punters could persist, potentially putting further pressure on BTC prices in the coming weeks. The outflows from GBTC have also prompted discussions about lowering fees to remain competitive with other spot ETFs.

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BITO’s Impact: Futures-Based ETFs Add to the Woes

Additionally, BTC’s decline is not limited to the US market. Canadian and European exchange-traded products (ETPs) have witnessed substantial outflows in the past week as investors opt for cheaper US ETFs. The ProShares Bitcoin Strategy ETF (BITO), a futures-based fund with over $2 billion in assets under management, is also making waves. Although it holds no actual Bitcoin, it accounts for a staggering 36% of Bitcoin contract open interest at the CME Group’s exchange. As BITO and other futures-based funds experience outflows, they may be forced to close long positions in the futures market, adding further downward pressure on Bitcoin prices.

Historic Week As Bitcoin Spot ETFs Surpass $10B In Trading Volume In 3 Days

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In a historic week for the cryptocurrency market, U.S. Bitcoin spot exchange-traded funds (ETFs) have witnessed a staggering trading volume of nearly $10 billion within just three days. Analysts have closely observed the performance of major ETFs, including Grayscale GBTC, BlackRock’s IBIT, and FBTC, as the market experiences both highs and lows.

Bloomberg analyst James Seyffart reported that the total trading volume of U.S. Bitcoin spot ETFs reached $9.771 billion, with Grayscale GBTC leading the pack at $5.174 billion, followed by BlackRock’s IBIT at $1.997 billion and FBTC at $1.479 billion. Seyffart characterized these launches as “very successful,” acknowledging Wisdomtree’s lower asset value but noting it’s only the third day, terming it a “LONG race.”

Eleanor Terrett, a journalist at FoxBusiness, engaged Seyffart in a discussion on the perceived success of the launches. Seyffart emphasized that, by most metrics, the ETFs had achieved significant success, with the exception of Wisdomtree, which he deemed as a potential contender in the longer term.

Rollercoaster Ride For Bitcoin

The entry of ten new spot ETFs into the U.S. market has ushered in a period of unprecedented volatility for Bitcoin. Glassnode’s recent report highlighted the roller-coaster ride, showcasing both multi-year highs and year-to-date lows for Bitcoin prices. The SEC’s approval of these ETFs marked a pivotal moment, bringing traditional finance further into the realm of cryptocurrency.

However, the approval process was not without its share of drama, with false starts on January 9th and 10th. BTC prices experienced spikes and subsequent sell-offs as confusion ensued. Eventually, full confirmation was received, and trading commenced on January 11th.

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Over the first two days of trading, combined spot ETF volumes exceeded $7.823 billion, attracting over $1.4 billion worth of assets under management (AUM). Despite outflows from the now-converted GBTC ETF product, GBTC remains a dominant force, accounting for approximately 57% of the total trade volume.

The total holdings of U.S. spot ETFs now include a substantial 644,860 BTC, equivalent to approximately $27.2 billion, constituting 29.7% of global ETF holdings after just two days of trading. Analysts argue that this marks one of the most significant ETF launches in history, signaling a new phase in Bitcoin’s maturation process.

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As Bitcoin investors continue to debate the impact of these events, market indicators such as futures open interest, options market dynamics, and long-term holder behavior suggest a complex landscape. With the ETFs now in play, the question remains whether the influx of demand will sustain Bitcoin’s upward trajectory, challenging the notion that these developments were already priced in.

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