Bitcoin price could drop 5% as BlackRock and Fidelity soak up Grayscale outflows


Bitcoin (BTC) price continues to move horizontally, subdued by the 50-day Simple Moving Average (SMA) with developments in the area of Grayscale Bitcoin Trust (GBTC) flows having a bearing on the market.

Bitcoin, altcoins, stablecoins FAQs

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

Bitcoin dominance is the ratio of Bitcoin’s market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

Grayscale Bitcoin shares outflows soaked up by BlackRock and Fidelity

Reports indicate that while the GBTC continues with outflows, BlackRock and Fidelity, the issuers of IBIT and FBTC spot ETFs, continue to soak up the sales.

Specifically, what started with the trust holding 619,000 BTC in January now stands at around 478,000 BTC, representing a 22% drop in a month.

The majority of the outflows have been soaked up by BlackRock and Fidelity, leaving BlackRock with up to $3.2 billion worth of Bitcoin.

Elsewhere, reports indicate that GBTC impact on Bitcoin price continues to reduce. It comes as spot BTC ETFs from BlackRock, Bitwise, Fidelity, ProShares, and 21Shares, witnessed a return to inflows, accumulating over $700 million in inflows last week.

The diminishing outflows from Grayscale’s converted GBTC fund contributed to the positive trend, with the inflows (around $708 million) marking the second-largest since the launch of spot Bitcoin ETFs in the US.

Digital-asset investment products saw a return to inflows last week, with over $700 million added globally. This includes the second-largest weekly inflows since spot BTC ETFs were launched in the US.

The average annual return of Bitcoin over the past seven years has been 44%, with net inflows into Bitcoin spot ETF over the past 15 trading days amounting to over $38.5 million.

A recent report also revealed that outflows of GBTC fell 70% from their peak as Bitcoin exchanges dump BTC. It comes after research showed that Bitcoin ETFs—including GBTC—could soon start to see net inflows as exchanges’ BTC balances return to their declining trend.

The report followed analyses by Santiment experts, highlighting return of Tether (USDT) stablecoin inflows to exchanges, historically seen as a bullish trend as it points to intention to sell.

Grayscale has ranked first in the list of top five publicly traded companies with the most significant BTC holdings. It leads the likes of MicroStrategy, BlackRock, Fidelity, and Purpose Investments, recording an outstanding $487,026 BTC. The shares are available for purchase on the stock exchange.

The growing influence of mainstream institutions in the Bitcoin space is impressive, with Grayscale boasting significant holdings as well as the other four entities. This hints at growing confidence in the long-term value of digital assets, bridging the gap between traditional finance and the innovative realm of cryptocurrencies.

Appearing on Monday, Federal Reserve chair Jerome Powell expressed worrisome comments about the US government’s unsustainable path. He said the US is on a “unsustainable path” as debt will outpace economic growth. In his opinion, investors will soon question the government’s ability to pay its debt, which will push them towards dumping the US dollar in favor of a hedge. In such a turn of events, Bitcoin would pass as the best candidate for this hedge.

Bitcoin price outlook with a possible 5% drop in the works

Bitcoin price remains range-bound, consolidating between the centerline and the upper band of the Bollinger indicator at $41,882 and $44,182. The two levels appear to be coming together, a move that often precipitates an impulsive or rash move soon.

The Relative Strength Index (RSI) is bearish and could soon break below the yellow band (signal line). Tilting the odds further in favor of the bears, the Moving Average Convergence Divergence (MACD) also appears subdued below its histogram bars and could soon fall in negative territory. The Awesome Oscillators (AO) are also flattened out, a sign of dissipating bullish presence.

With this outlook, Bitcoin price could fall 5% to find support offered by the confluence between the 100-day Simple Moving Average (SMA) and the horizontal line at $40,651. Below this level, BTC could dip into the demand zone between $38,496 and $39,582.

BTC/USDT 1-day chart

On the other hand, increased buying pressure could see Bitcoin price overcome the resistance due to the upper band of the Bollinger indicator at $44,184. This could see BTC climb to $48,000, or in a highly bullish case, tag $50,000. Such a move would denote a 20% climb above current levels.


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