Q1 has been predicted to be challenging for Bitcoin according to Matrixport, with the price expected to dip to around $36,000 and then recover.
It cannot be overstated just how impactful the Bitcoin spot ETF has been on the industry’s collective consciousness. In the years leading up to its approval, the crypto sector waited on bated breath and endlessly speculated about what it would mean if it went through. Now that the ETF is a reality, there is still a lot of attention surrounding what its short and long-term impact will be. According to Matrixport, the price of Bitcoin can be expected to take a hit in the first quarter.
Bitcoin to Stumble in Q1?
In the last week, Bitcoin has fallen to the $39,000 support level and this has brought into question the impact of the ETF. Some optimistic experts had hoped for a bull run-like effect in the weeks following the ETF’s approval.
It is worth noting that interest from TradeFi in the ETF has not quite reached the level that some were hoping for and this could be a factor. The latest report from Matrixport, however, implies that the crypto industry should brace for even more of a decline. According to Matrixport, the price of Bitcoin will reach the support level of $36,739 in the first quarter. But this should not be cause for despair as the same report notes that it will rebound from this price point.
The reason for this prediction is that both Bitcoin’s liquidity and its core support base are strong. And while there might be teething problems with regard to the ETFs’ entry into the market, these hurdles will be overcome.
How the ETFs Are Faring
With all this discussion about the impact of the ETFs on Bitcoin’s price, it is worth exploring how the ETFs themselves have been performing. Notably, there has been a pattern of ETFs capitalizing on the initial Bitcoin price spike and reporting outflows. For example, Grayscale’s Bitcoin spot ETF GBTC reported a net outflow of $394 million on January 25. This is besides a single-day trading volume of $502 million and cumulative net outflows of $4.79 billion. Over a three-day period, these outflows slowed, which could point to a reversal of this trend moving forward.
Still, these outflows likely contributed to the dipping of the Bitcoin price and whatever actions are taken by the ETFs will be reflected in the market price moving forward. There are endless news stories of ETFs buying tens of thousands of Bitcoin tokens and we are seeing these funds becoming a new class of whales. This was bound to happen once the spot applications were approved and now, the industry will have to grapple with whatever impacts they make on the token’s price, positive or negative.