• Bitcoin drops to its lowest post-ETF level on Thursday

  • Sell-the-news reaction and profit taking persist

  • ETF inflows grow, diverging from the price action

 

Post-ETF slide continues

On Thursday, Bitcoin fell to its lowest level since the U.S. Securities and Exchange Commission’s (SEC) approved spot-Bitcoin ETFs, validating analysts’ fears that this could turn out to be a sell-the-news type of event. Following a fresh two-year high of $49,051 in the aftermath of the decision, Bitcoin’s price dropped to as low as $40,483 but at least held above the $40,000 psychological mark.

As the ETF fever has clearly faded, investors are now focusing on where the market is likely to consolidate before it edges back higher again. For now, it seems that profit taking has not yet run its course, with Bitcoin price extending its series of lower lows in the short term.

Meanwhile, crypto traders are taking cues from how the market has reacted in the period surrounding the SEC’s decision to build their positions for the impending Ethereum’s Dencun and Bitcoin halving events. An argument in favour of spot ETFs was that the entrance of big Wall Street names in the industry coupled with a stricter regulatory framework, would reduce uncertainty and make crypto markets more mature.

Therefore, this idea would be put to the test in the upcoming months by assessing whether speculative trading in general but especially during major volatility events will persist.

ETF inflows rise

Even though Bitcoin has lost more than 10% since the SEC greenlighted ETF applications, demand for those products has been relatively strong. BlackRock is holding the lead among the pack, having already surpassed $1 billion in capital inflows. At the same time, Grayscale’s Bitcoin ETF has seen large outflows due to its high fees but retains the most funds under management.

It is interesting how all these tie together because the main narrative behind Bitcoin’s value was its decentralised nature and independence from the banking system. Therefore, why would crypto advocates seek exposure through ETFs, which deprive Bitcoin from its perceived positive attributes?

Technical levels to watch

BTCUSD (Bitcoin) has experienced a strong decline from its recent two-year peak of $49,051, dropping to a fresh one-month low of $40,483. Even though the decline seems to have paused for now, it could easily accelerate in case we see a close below the crucial $40,000 psychological mark.

If downside pressures persist, the price could revisit its 2024 bottom of $40,483 ahead of the $40,000 psychological mark.

On the flipside, bullish actions could propel the price towards the latest resistance of $43,565 before $44,725 comes under examination.