The crypto market is down today, with the total market capitalization falling by 3.13% to reach $1.63 trillion on Jan. 19. This movement has decreased Bitcoin’s (BTC) market dominance by 0.12% to 48.83% as the excitement surrounding spot ETFs cools off.
Cryptocurrency market performance, 1-day chart. Source: Coin360
BTC price has been oscillating around $42,000 throughout the week and traders look to accumulate below $40,000, but experts predict the days of the impact of spot Bitcoin ETF approval are largely behind the recent downturn.
Ever since the launch of the spot Bitcoin ETFs on Jan. 10, there have been massive outflows witnessed from the Grayscale Bitcoin Trust (GBTC). As a result, Grayscale has liquidated a large number of Bitcoins as part of its GBTC holdings. A total of $2.2 billion has moved out of GBTC so far over the last week.
In a recent statement, popular economist Peter Schiff believes despite the approval of the Bitcoin Spot ETF, the price of BTC is not increasing due to outflows from Grayscale’s GBTC product. He mentioned that even though the total inflows were larger, it seems to have limited impact on the overall BTC market.
Bitcoin at risk of 60% losses
BTC is at an inflection point as it trades in a significant zone stretching from $40,000 to $45,000.
Bitcoin bulls have an uphill task of making sure that the price rises this zone. Note that the last time the price dropped from this zone, it went on to plummet more than 65% to set a swing low below $16,000. If the same scenario plays out, BTC may experience massive drops from the current levels.
U.S. dollar strength index (DXY) – 1-day chart. Source: TradingView
On the upside, the weekly RSI was still moving within the position region. The price strength at 65 suggested that the bulls were still in control in the medium term. Additionally, all the major movig averages were pointing upwards, suggesting that the market conditions still favoured the upside.
As such, Bitcoin could turn up from the current levels with the first line of resistance emerging from the $42,000 psychological level. Above that, buyers would have to push the price above $45,000 to secure the uptrend.