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Bitcoin Plunges to $43k Amid Unexpected ETF Impact, Payout & Sell-offs

Bitcoin Drops to 43k Following ETF Approval – What’s Behind It?

Following the approval of eleven Spot-ETF applications on January 10, 2024, the Bitcoin [BTC] price fell from $48.9k on Binance on January 11 to $41.5k just one day later. Many investors had expected the prices to skyrocket, while others argued that this event was already priced in. In the short term, the latter assumption proved to be correct.

The Role of Grayscale Payouts

Ki Young Ju, the founder and CEO of CryptoQuant, shared on X (formerly Twitter) that Grayscale has sent 21.4k BTC to multiple addresses over the past 30 days. Although this payout was not the sole reason for the price drop, it did play a role.

The Impact of the Coinbase Premium Gap

Maarten examined on X the impacts of this BTC outflow. He found that after the commencement of Spot-ETF trading, the Coinbase Premium Gap fell into the negative range. This premium is the price difference between the BTC/USD pair on Coinbase and the BTC/USDT pair on Binance. Higher values mean that US investors are interested in buying BTC, while negative values suggest that US participants are selling their BTC.

Will the Price Decline Continue Next Week?

AMBCrypto analyzed the Bitcoin liquidation heatmap to understand where prices might go next. Since liquidity is one of the main driving forces in the market, high liquidity pockets could help identify where trends could reverse.

The liquidity pool at $48k-$48.2k was tested and BTC experienced a sharp reversal near $49k on January 11. On the lower side of the chart, the $39.2k-$40k region has a much denser concentration of large liquidation levels. Further down, the $35k and $33.8k levels were estimated as places with even more liquidation levels. Therefore, a reversal to these levels in the coming weeks or months would very likely mark a local market bottom.

Given the current state of affairs, it is more likely that BTC will fall to seek liquidity than climb above $50k.

Sources: AMBCrypto, CryptoQuant