Bitcoin Correction to $34K Predicted as Grayscale Dumping Continues

BTC has dropped to its lowest price level for seven weeks, hitting $39,500 during Tuesday morning’s Asian trading session.

The 3% daily decline has increased the size of the BTC pullback to 18.5% from its Jan. 10 high of $48,500. Moreover, analysts have predicted that the correction could continue and be as deep as 30%, which would drop Bitcoin prices back to $34,000.

Grayscale Selling Dumps Markets

On Jan. 23, on-chain analytics platform CoinGlass posted a liquidation heatmap with a bright spot at this $34,000 level. CoinGlass also reported that there have been $225 million in liquidations over the past 24 hours. The majority were in long positions for Bitcoin and Ethereum.

“Grayscale continues to dump the market,” it stated before adding that there was still more than 550,000 BTC in the company’s Bitcoin Trust (GBTC).

#Bitcoin liquidation heatmap (3 month)

Heatmap brighter liquidity cluster at $34005.

Grayscale continues to dump the market.

Total Bitcoin in Trust 552.68K

1d Change -14.29K
7d Change -39.42K

https://t.co/Nu9kTJMzy2https://t.co/Blt2gsNRBx pic.twitter.com/pj2MvBGKo2

— CoinGlass (@coinglass_com) January 23, 2024

However, 27,717 BTC has been bought by fund issuers on a net basis since the spot ETFs launched, reported CC15Capital. That equates to around $1.1 billion at current prices despite the outflows from GBTC.

UPDATE
GBTC just announced 15K #BTC outflows.

Down to 552K #BTC holdings.

Total ETF flows have been negative last two trading days.

Follow our ETF Tracker for live updates. pic.twitter.com/og47IwSe9i

— Thomas | heyapollo.com (@thomas_fahrer) January 23, 2024

Tether and VanEck strategist Gabor Gurbacs commented that Bitcoin ETFs absorbed the FTX GBTC estate sale pretty quickly and without a large impact. “Estate sales are no longer a catastrophe,” he said before adding:

“Bitcoin is flowing from weak hands to strong hands. Glad we made the ETFs possible. It changes the game and tames downside volatility.”

“Monday has been a bloodbath for most of the crypto sector,” reported Santiment on Jan. 23. The blockchain analytics provider added that there is 35% less discussion toward BTC and 21% less toward ETH compared to before the ETF approval week.

“FUD is beginning to enter the picture, which should create nice price bounce opportunities when it reaches its peak.”

Elsewhere on Crypto Markets

Total market capitalization has declined by 2.8% on the day to $1.65 trillion at the time of writing.

Moreover, Bitcoin has recovered slightly to reclaim $40,000, but the short-term outlook spells more pain.

The altcoins were a sea of red on Tuesday morning in Asia with Solana (SOL), Avalanche (AVAX), Chainlink (LINK), and Litecoin (LTC), absorbing the largest losses.

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