Bitcoin has moved sideways as the rest of the crypto market, particularly Ethereum and the DeFi sector, show strength. The first cryptocurrency by market cap needs to take a crucial step to break out of its current range, but it could face downtrends in the short term, some recent reports claim.
BTC is moving sideways on the daily chart. Source: BTCUSD Tradingview
Banking giant JP Morgan released a report by its strategist Nikolaos Panigirtzoglou on the supposedly bearish signals caused by the upcoming stocks of the Grayscale Bitcoin Trust (GBTC). The analyst expects this event to pose a headwind for Bitcoin in July.
This investment product enables its holders to only sell their GBTC shares after a six-month lock-up period. Panigirtzoglou expects investors to liquidate their shares worth around 140,000 BTC. Thus, they will create selling pressure in an already weaker BTC price.
One thing we haven’t discussed yet – the schedule for unlocking $ GBTC in grayscale looks really crispy
From mid-April to mid-June, shares worth 139,000 Bitcoin were activated. There are more shares worth 140,000 Bitcoin that will be unlocked by the end of July
– Meltem Demir ◎ rs (@Melt_Dem) June 23, 2021
This bearish theory has gained momentum and has raised concerns among investors and traders. Alex Mashinsky, CEO of Celsius Network, shares this vision and predicts that the price of BTC will fall in the coming weeks.
This will be the third and final surrender event, according to Mashinsky, before Bitcoin resumes its rally towards USD 100,000 by the end of 2021. The unblocking should take place around the middle of July. During that period, the GBTC discount will rise to 25%, Mashinsky said.
He later predicts that some hedge funds will want to take advantage of the arbitrage opportunity between the Bitcoin price on the spot market and the GBTC discount. So they could short BTC and buy GBTC at a higher discount.
At least $ 5 billion must be processed by GBTC, which could bring BTC prices back to the $ 29,000 level
After that sell out in July, we should see a smooth flow for the rest of the year as we break new ATH on our way to the ATH
$ 140-160,000 price range per BTC …
– Alex Mashinsky © ️ (@Mashinsky) July 3, 2021
The most bullish scenario for Bitcoin? One way to $ 100,000
On-chain analyst Willy Woo believes there are two possible implications. Your interactions will determine how the crypto market will be affected. However, he assumes that the GBTC activation will be mostly bullish in the short term.
JP Morgan is pessimistic about the upcoming GBTC unlock.
Here I go through the inner workings so that you can form your own opinion.
There are 2 effects, one bullish and one bearish. The key is how they interact. IMO it gets bullish right away.https: //t.co/xcfMbhCBPP
– Willy Woo (@woonomic) July 6, 2021
The GBTC is structured to receive BTC without ever leaving the trust. Hence, Woo said the only way for this product to reduce its inventory is through Grayscale’s 2% fee. In the derivatives sector, investors can buy BTC on the spot market to buy GBTC while taking a short position.
This way you can hedge your position while receiving money from your short. When the activation period comes, investors can sell their GBTC shares and close their shorts. This is a bullish case as investors need to buy BTC locally in order to acquire the shares.
For this trade to be profitable, Bitcoin must currently be above its annual opening price of around $ 29,000 if released when investors buy back the shares in January. Hedge funds and other major players that have invested in the GBTC have incentives to hold this critical support.
The second impact could take place on the spot market. Activation would lower the GBTC premium and could motivate investors to buy stocks instead of Bitcoin on site. Woo added:
(Impact 1) works suddenly and directly, while (Impact 2 2) works very slowly. So it’s bullish. The overall effect in the long run is neutral as all of the arbitrage balances out over time. What we are analyzing are the short-term demand / supply imbalances that can affect price.
Other experts failed to see the link between the unblocking and the price of BTC. In any case, July seemed to be a crucial month for the overall market. The bulls may finally get the push to re-enter pricing mode.
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