BTC was down by more than 7% in the last 24 hours.
Sell sentiment was dominant in the market, and indicators looked bearish.
After the recent Bitcoin [BTC] ETF approvals, excitement grabbed the entire crypto community as several expected a bull rally. However, things on the ground turned out to be very different.
Instead of a bull rally, BTC prices witnessed a massive correction, pushing its value down under the $43,000 mark once again.
Therefore, AMBCrypto planned to do a thorough check on the king of crypto’s health to understand what caused this retrenchment and whether there were any chances of a trend reversal.
The aftermath of Bitcoin ETF approval
As AMBCrypto reported earlier, the SEC approved the much-anticipated spot ETFs. The approval raised investors’ expectations from BTC. Soon after the approval, BTC’s trading volume did increase.
Santiment’s recent tweet revealed that Bitcoin continued to be traded and moved at predictably high rates as trading volume recently spiked to its highest level since the FTX crash that happened 15 months ago.
📊 #Bitcoin continues to be traded and moved at predictably high rates following Wednesday’s approval of 11 #ETF’s. Trading volume recently spiked to its highest level since the #FTX collapse 15 months ago. Additionally, #Binance perpetual contract open interest rates
(Cont) 👇 pic.twitter.com/kuyKNGmFpV
— Santiment (@santimentfeed) January 12, 2024
While that happened, a key BTC indicator turned bearish. Ali, a popular crypto analyst, recently posted a tweet highlighting BTC’s Inter-Exchange Flow Pulse (IFP). For starters, the metric tracks BTC flows between various trading platforms.
As per Ali’s tweet, the metric had fallen below its 90-day average. Whenever the metric reaches that level in history, BTC’s price action turns bearish.
Could we be seeing a market top for #Bitcoin?
The Inter-exchange Flow Pulse (IFP), which tracks $BTC flows between various trading platforms, has just fallen below its 90-day average. Historically, this shift often signals a bearish turn in the #crypto market! pic.twitter.com/ohkaKHP7ZO
— Ali (@ali_charts) January 12, 2024
And as predicted, the king of cryptos witnessed a major price correction. According to CoinMarketCap, BTC was down by more than 7% in the last 24 hours alone.
At the time of writing, BTC was trading under $43,000 at $42,803.92 with a market capitalization of over $838 billion.
Sell pressure on Bitcoin is high
As mentioned earlier, BTC’s trading volume did spike in the recent past. However, most of this traction was coming from sell-offs. As per the latest data, 4,000 BTCs, which were worth over $175 million, have been shifted from Grayscale’s Bitcoin Trust to Coinbase.
Recent blockchain analysis unveils a massive move.
4,000 Bitcoins (worth $175M) have been shifted from Grayscale’s Bitcoin Trust to Coinbase.
The transfers happened in four batches of 1,000 BTC each.
Source: Arkham pic.twitter.com/IigUgaxPyX
— Kashif Raza (@simplykashif) January 13, 2024
Not only that, but whales were also selling their Bitcoin holdings.
Lookonchain recently posted a tweet highlighting an interesting whale activity. As per the tweet, a whale deposited all 2,742 BTC worth $127.5 million to Binance after ETF approval, earning the whale a profit.
A whale deposited all 2,742 $BTC($127.5M) to #Binance to take profits after the #Bitcoin spot ETF opened trading.
The whale withdrew 2,742 $BTC($53M) from #Binance between Oct 7, 2022, and Dec 29, 2023, at an average price of $19,337.
The profit exceeded $74M! pic.twitter.com/1O96Z9ihie
— Lookonchain (@lookonchain) January 12, 2024
To better understand whether selling pressure remained high, AMBCrypto checked Santiment’s data.
Our analysis revealed that BTC’s supply on exchanges went above its supply outside of exchanges, clearly indicating that investors were dumping BTC. These major sell-offs also might have played a major role in BTC’s latest price correction.
Source: Santiment
Our look at CryptoQuant’s data also painted a similar picture. BTC’s exchange reserve was increasing, indicating higher selling pressure. Its aSORP turned red. This meant that more investors were selling at a profit. In the middle of a bull market, it can indicate a market top.
Not only that, BTC’s Coinbase premium also turned red after quite a few weeks, suggesting that selling sentiment was dominant among US investors.
Source: CryptoQuant
What to expect from BTC?
The negative price action also had an impact on the coin’s market sentiment. An analysis of Santiment’s data pointed out that bearish sentiment around BTC increased as its weighted sentiment dropped substantially on the 12th of January 2024.
Nonetheless, BTC remained a hot topic of discussion in the crypto space, which was evident from its high social volume.
Source: Santiment
To see whether investors should expect BTC’s price to plummet further in the days to follow, AMBCrypto analyzed BTC’s daily chart. The analysis revealed quite a few bearish market indicators, suggesting a further southward price movement.
Read Bitcoin’s [BTC] Price Prediction 2024-25
For example, BTC’s MACD displayed a bearish crossover. Both Bitcoin’s Money Flow Index (MFI) and Relative Strength Index (RSI) were resting near their respective neutral zones.
Additionally, its Chaikin Money Flow (CMF) registered a sharp downtick, increasing the chances of a continued price drop.
Source: TradingView
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