The price of Bitcoin is hitting a three-month low, causing many market analysts to warn of a potentially stronger price drop. According to Geoffrey Kendrick, head of digital asset research at Standard Chartered, Bitcoin could continue to decline to the $80,000 range, or even lower.
Additionally, former BitMEX CEO Arthur Hayes also noted that Bitcoin is approaching a dangerous price zone he refers to as 'goblin town' – a term that implies a strong bear market.
Selling Pressure from Bitcoin ETF Increases Downward Pressure
Bitcoin peaked at $108,000 last month, but has now dropped below $87,000, primarily due to three major factors:
The new trade war of President Donald Trump.
Changes in interest rate expectations from the Federal Reserve.
Global macroeconomic instability.
Additionally, the meme coin sell-off has also dragged down the price of Solana ($SOL ) creating a negative effect on the entire market.
Selling pressure is also coming from spot Bitcoin ETF funds. Data from CoinGlass shows that on Monday, these funds experienced net outflows of up to $516 million. Kendrick warns that if the daily net outflows of the Bitcoin ETF exceed $1 billion, the market could enter its largest price drop ever.
Could the 'Basis Trade' Strategy Push Bitcoin Price Down to $70,000?
Arthur Hayes provided an important analysis of the impact of BlackRock's Bitcoin ETF (IBIT) on the market. According to him, many hedge funds are implementing the #basistrade strategy – a form of arbitrage trading between spot Bitcoin and Bitcoin futures.
Specifically, they:
Buy IBIT (BlackRock's spot Bitcoin ETF).
Sell Bitcoin futures to profit from the spread when the spot Bitcoin price converges with the futures price.
If this spread narrows as Bitcoin depreciates, these funds will sell IBIT and repurchase CME futures, creating additional selling pressure and pushing Bitcoin down to $70,000.
If Hayes' prediction is correct, Bitcoin will lose nearly all gains after Donald Trump's election, when BTC traded around $69,300 on the night of his victory.
Bitcoin ETF – A New Tool for Institutional Investors
According to Greg Magadini, head of derivatives at #Amberdata , the spot Bitcoin ETF has provided a new financial tool that allows investors to exploit high yields in the crypto ecosystem.
Previously, the crypto market had high capital costs, with interest rates on perpetual contracts or futures contracts reaching up to 30% per year. However, with the emergence of the Bitcoin ETF, this yield could decrease to levels comparable to the 10-year US Treasury bond yield (4.42% as of Tuesday).
Magadini noted that this could be a structural trend, causing yield levels in the crypto market to gradually converge with those of traditional finance. This could reduce the profitability of arbitrage trades and impact the flow of investment into Bitcoin.
Conclusion: How Low Will Bitcoin Drop?
Although Bitcoin may recover in the long term, in the short term, the market is facing many risks:
✅ The Bitcoin ETF is experiencing significant capital withdrawals, potentially reaching a net withdrawal threshold of $1 billion per day.
✅ The basis trade strategy could create selling pressure, pushing the price down to $70,000.
✅ Unfavorable macroeconomic factors, including Fed policies and US-China trade tensions.
In summary, if selling pressure continues to increase, Bitcoin could potentially fall to the $80,000 - $70,000 range, or even lower. Investors need to closely monitor market developments before making trading decisions.