Bitcoin continued its slide to reach a six-week low below $40,000 on January 20. The sell-off following the launch of Bitcoin exchange-traded funds (ETF) on January 11 shows that cryptocurrency traders bought the rumor and sold the news. While most of the recently approved Bitcoin ETFs have been seeing strong inflows, Grayscale Bitcoin Trust (GBTC) has seen more than $2.8 billion in net outflows. FTX's bankruptcy estate was the major seller, offloading shares valued at nearly $1 billion.

JPMorgan analyst Nikolaos Panigirtzoglou said in a recent post that “up to $3bn had been invested into GBTC in the secondary market during 2023 in order to take advantage of the discount to NAV.” He expects the arbitrageurs to book profits, putting Bitcoin under pressure in the next few weeks.

Bitcoin surged above the resistance line of the ascending channel pattern on January 11, but the bulls could not sustain the higher levels. That may have tempted profit-booking by the bulls, which pulled the price down to the support line on January 12.

After a few days of consolidation, the selling resumed on January 18. The moving averages have completed a bearish crossover, and the relative strength index (RSI) is in the negative territory, indicating that the bears are trying to take charge. The $40,000 level is the crucial support to watch out for on the downside. If the price rebounds off the current level and rises above the moving averages, it will suggest that the corrective phase may be over. On the other hand, if the price turns down from the moving averages once again, it will suggest that the sentiment has turned negative and traders are selling on rallies.

That will increase the likelihood of a drop below $40,000. If that happens, the BTC/USD pair could plummet to the next major support near $35,500.

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