As Bitcoin experiences over a 7% decline to $41,600 since the debut of spot ETFs in the U.S. on Thursday, analysts at 10x Research caution that a classic “sell the fact” price action might be underway.

The report, led by Markus Thielen, has issued a cautionary note, suggesting that the sell-off might persist in the near term, potentially reaching a support level of $38,000.

Bitcoin Declines Following First Bitcoin ETF Debut

The Bitcoin decline follows high expectations for substantial inflows following the spot ETF approval. Bitcoin initially rallied to over $49,000, aligning with projections from a triangle breakout and the 2-3 year average price level for investors, often considered as resistance.

10x Research highlighted a triangle pattern in its December 29 note, predicting a potential +/-10% move in either direction. While the market experienced a rally, the pattern now indicates the possibility of a retracement.

The technical analysis conducted by 10x Research points to a bearish divergence signaled by Bitcoin’s Relative Strength Index (RSI). The RSI divergence, coupled with a drop of over 5%, has raised concerns about a correction in the market.

The Moving Average Convergence Divergence (MACD) histogram crossing below zero further supports a bearish shift in momentum.

The report also drew attention to historical precedents, noting that BTC has witnessed significant retracements following key events such as the December 2017 Bitcoin futures launch, the Coinbase listing in April 2021, and the October 2021 futures ETF.

Analysts at 10x Research suggest that these historical patterns indicate a likelihood of market fatigue.

Grayscale ETF Shifts May Add Downward Pressure

Thielen also notes that investors in Grayscale’s ETF, the former Grayscale Bitcoin Trust (GBTC), shifting to lower-fee options may contribute to downward pressure on Bitcoin’s price. While Grayscale has a 1.5% management fee, competitors like BlackRock charge only 0.25%.

Thielen emphasized that Grayscale’s decision to bet on investors gradually switching from their higher-fee offering may impact Bitcoin’s value.

Furthermore, he highlighted concerns surrounding Grayscale and its parent company, DCG, citing negative news and the history of overcharging GBTC holders with a 2.0% management fee on a product that once traded at a 50% discount to its net asset value.

According to 10x, investors are likely to divest their Bitcoin holdings before transitioning to a different ETF provider, resulting in a downward impact on BTC and creating a lingering concern.