The Bitcoin price experienced a further sell-off yesterday and fell by more than 5% intraday to as low as $40,660. Since the year-to-date high of $49,000 on January 11, the BTC price has dropped by as much as 17%. However, according to renowned crypto analyst Jacob Canfield, this may not be the end of the correction. In a recent analysis, Canfield warned that more downside could be on the cards in the short-term. The analyst, known for accurately predicting the local top of Bitcoin, addressed the prevailing uncertainty in the market. “The question that everyone is asking now is ‘where do we go from here?'” the analyst posed, acknowledging the community’s growing concern. A significant factor in the current market dynamics is the approval of a Bitcoin ETF, which has led to speculation about Grayscale Bitcoin Trust (GBTC) investors selling their holdings to evade the associated fees. The narrative is compounded by revelations from court filings that the FTX bankruptcy estate holds a substantial number of GBTC shares, approximately 22,280,720 (worth $744 million), poised for liquidation. Related Reading: Bitcoin Price In Danger? This Terrible Story Could Happen Again Conversely, signs of market optimism emerge with BlackRock’s ETF, IBIT, reportedly accumulating spot Bitcoin aggressively, adding up to 25,067 bitcoins in under a week. The analyst suggests that this buying momentum from BlackRock may eventually counterbalance the selling pressure from GBTC, especially when considering the impact of the upcoming Bitcoin halving, creating a ‘delayed impact’ event potentially tipping the scale towards demand over supply. How Low Can Bitcoin Price Drop? The chart analysis provides a more immediate and grim perspective. The Bitcoin 4-hour chart indicates a lost trend that’s now acting as resistance, historically a foreboding sign for short to mid-term price movements. “The 4 hour trend on bitcoin has been lost and tested as resistance. This is not great as the 4 hour trend historically has been a good indicator for short term/mid term price movements, the analyst remarked. Canfield further points out, “If I was looking for a level for a short term bounce, it would probably be at a sweep of the $40,000 liquidity,” hinting at potential downward pressure on the price. Related Reading: Economist Foresees $115,000 Bitcoin Peak, Followed By Largest Crash Since 1929 The Bitcoin daily chart presents a narrow path, with significant levels at $48.7k, marked by the 61.8% Fibonacci retracement and weekly resistance, and a notable support level at $38.7k. “As I’ve noticed in former posts, after BTC taps the 61.8, it tends to sell off 18-22%, which would give us another crack at that $38.7k level as well,” warns Canfield. Furthermore, the daily 200’s (EMA/MA) are currently trending upwards, having previously acted as support, suggesting they might cushion a further price fall. The analyst concludes with a word of caution, emphasizing the need for vigilance in the current market characterized by low volume and volatility, conditions that often precede substantial market movements: “Biggest thing I can stress is that caution is needed during low volume/low volatility environments as a big move typically follows.” At press time, BTC traded at $41,178. Featured image created with DALL·E, chart from TradingView.com
