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3 Reasons Why Bitcoin (BTC) Might Fall to $35,000, And It's Okay

Published 01/29/2024, 12:57 PM
Updated 01/29/2024, 01:00 PM
© Reuters.  3 Reasons Why Bitcoin (BTC) Might Fall to $35,000, And It's Okay

U.Today - BitMEX cofounder Arthur Hayes's recent activity suggests that he anticipates Bitcoin plummeting below the $40,000 mark, as evidenced by his purchase of put options with a strike price of $35,000 set to expire on March 29. His prediction aligns with the technical analysis that showcases Bitcoin's struggle to maintain its foothold above critical support levels.

The rationale behind this bearish outlook can be dissected into three key factors:

  • U.S. Treasury quarterly refunding announcement: Scheduled for Jan. 31, this event is vital as it may influence the liquidity on financial markets, affecting risk assets such as Bitcoin.

  • Options market activity: Hayes's options purchase indicates a strategic bet on Bitcoin's decline, signaling a lack of confidence in the digital gold's short-term prospects.

  • Grayscale's selling activity: Grayscale has been offloading BTC to reimburse investors exiting the GBTC fund. Previously, GBTC shares were redeemed in USD without selling the underlying BTC, which is no longer the case after the spot ETF approval.

  • BTC/USD

    • High management fees: Grayscale's 1.5% yearly fee is significantly higher than other ETF issuers, prompting investors to seek more cost-efficient alternatives.

    • GBTC discount closure: Investors who previously purchased GBTC shares at a 40% discount are seizing the opportunity to exit at a break-even point.

    While the immediate future may appear bleak for Bitcoin, with the possibility of descending to Hayes's predicted levels, the fundamental attributes that make Bitcoin a distinctive asset class remain unchanged.

    This article was originally published on U.Today

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