Bitcoin’s value is currently experiencing a decline, dropping below the $40,000 mark. Analysts attribute this downturn to Grayscale’s consistent liquidation and substantial sales of Bitcoin. Grayscale has played a significant role in this trend since the inception of spot Bitcoin ETF trading on January 12.

Data from Arkham Intelligence reveals Grayscale’s active selling activities through additional transfers of 8,593,075 BTC (approximately $335.19 million) to Coinbase, supplementing previously reported transfers of 69,994 BTC ($2.9 billion). These developments have notably impacted Bitcoin’s price, resulting in a substantial 20% decline over the past week and a half.

Bitcoin Price Downtrend continues

The downward trend in Bitcoin’s price continues, reaching a low of $38,500 on Tuesday and putting significant pressure on a critical support level. However, the $38,500 support has proven resilient, with Bitcoin rebounding to $39,300 at the time of writing.

Despite this recovery, uncertainties loom regarding the duration of Grayscale’s selling spree. If negative market sentiment persists, there is a possibility that Bitcoin could revisit the $30,000 mark. This level is slightly above the pivotal $29,000 mark, which marked the beginning of the bull run leading Bitcoin to its 22-month high of $49,000 on January 11th.

In the context of Bitcoin predictions, the market’s future trajectory remains uncertain, and investors are closely watching for signs of a sustained recovery or the potential revisiting of lower price levels.

How Low Will Bitcoin Price Drop?

The current market trend is influenced by bearish sentiments, particularly focusing on the critical $38,500 level. If this level gives way to Grayscale’s selling pressure, attention will likely shift to the next resistance at $37,750.

Failure to maintain support above $37,750 may lead to a decline towards a significant resistance at $35,600, acting as a defense against a dip to the next support level at $33,000. In a sustained downtrend, Bitcoin faces challenges, with key levels for potential bullish momentum between $29,000 and $30,000.

A breach below these levels could signal a shift in the current bullish market structure, potentially favoring bears in the mid-term, at least until the expected halving event in April — a crucial factor for market participants to monitor.