The reason for Dogecoin’s decline was found: FTX dumped nearly $1 billion in GBTC, causing market volatility

Original author：狗狗幣中文社群之新聞台

Original source：https://www.youtube.com/embed/MtHSs_jomgw

https://blockcast.it/2024/01/23/ftx-s...

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This news was published on January 23, 2024 Taiwan time
The title is: The reason for Dogecoin’s decline has been found: FTX dumped nearly $1 billion in GBTC, causing market volatility

Since its transformation into an ETF, the Grayscale Bitcoin Trust Fund (GBTC) has experienced a capital outflow of US$2.8 billion. The main seller was the bankrupt FTX. “CoinDesk” reported that FTX sold approximately 22 million GBTC shares after its bankruptcy, worth nearly $1 billion. The market originally expected that the listing of the Bitcoin spot ETF would attract funds and push up the price, but the price of Bitcoin fell instead and is currently around US$40,000. JPMorgan analysts predict that the listing of GBTC may lead to capital outflows of up to $3 billion. If the sell-off continues, Bitcoin may face greater pressure. However, as FTX liquidates its GBTC holdings, subsequent selling pressure may lessen. Investors used to buy GBTC at a discount, but after the transformation to a Bitcoin spot ETF, the discount rate narrowed, making investors choose to sell for cash. FTX is one of them. As of October 25, 2023, the GBTC held by FTX was worth approximately US$597 million, but by January 11, 2024, its value had risen to approximately US$900 million. Alameda Research, a sister company of FTX, denied the excessive fee lawsuit filed against Grayscale, showing the instability of the cryptocurrency market and investment risks.

In this news, we can analyze the price trend of Dogecoin from the following perspectives:

1. Short-term bearishness: Considering that the cryptocurrency market is highly sensitive to large-scale events, the news of FTX selling GBTC may have an immediate and negative impact on market sentiment, thereby causing short-term selling pressure on cryptocurrencies such as Dogecoin. Judging from past experience with market fluctuations, such as Tesla's suspension of Bitcoin trading in 2021, which caused a sharp decline in the market in the short term, a similar situation may happen again. In addition, from the perspective of technical indicators, the price of Dogecoin is often closely related to Bitcoin and mainstream cryptocurrency market trends. The current market uncertainty may cause its short-term technical indicators, such as the relative strength index (RSI) and mobile The average line shows a downward trend.

2. Long-term bullishness: From a long-term perspective, the resilience demonstrated by the cryptocurrency market shows that after experiencing short-term shocks, the market is often able to gradually recover and reach new highs, such as the gradual recovery after the cryptocurrency winter in 2018. Dogecoin, as a well-known representative in the market, may benefit from this recovery trend in the overall market in the long term. In addition, the strong community support and increasing commercial application scenarios behind Dogecoin provide a solid foundation for its long-term growth. The combination of these factors is expected to support a steady increase in the price of Dogecoin in the long term.

Overall, the news of FTX selling GBTC may have a negative impact on Dogecoin in the short term, triggering market selling pressure and causing the price to fall. However, from a long-term perspective, with the resilience of the cryptocurrency market and the community support behind Dogecoin, its price is expected to gradually recover and maintain steady growth. Therefore, despite the current challenges, the long-term outlook for Dogecoin remains positive. Based on the above factors, this channel believes that this is the golden moment for long-term investors to accumulate chips and plan for the future. However, it must be emphasized that these views we share are not professional investment advice. They are only based on our observations and analysis. If you have any questions about our interpretation, we recommend that you refer to the source news link attached in the information column. For further verification, it is crucial for investors to do their own homework. Please remember to never invest in something you do not understand, never invest in a position that you cannot afford to lose, and make investment decisions carefully. . Of course, we will continue to pay close attention to the latest developments in Dogecoin.