39Severe recession39 triggers massive market sell off Bitcoin price threatens to

'Severe recession' triggers massive market sell-off, Bitcoin price threatens to fall to $15,000 – Gareth Soloway

(Kitco News) – Just over two weeks since the approval of 11 spot Bitcoin ETFs and millions of inflows, the price of Bitcoin is down around 14% from its recent highs. However, according to Gareth Soloway, chief market strategist at VerifiedInvesting.com, a bigger risk for the world's largest cryptocurrency is a market sell-off triggered by a severe recession.

Following the spot approval of Bitcoin ETFs by the US Securities and Exchange Commission, the assets under management (AUM) of these funds exceeded that of silver ETFs. More specifically, the AUM of spot Bitcoin ETFs is currently around $25 billion, while silver ETFs have assets of around $11.5 billion. The only commodity ahead of Bitcoin is gold, with assets worth about $96 billion.

Despite opening the door to institutions and broader investors, Bitcoin has seen a significant decline from a recent high of around $49,000. At the time of writing, Bitcoin was trading at $41,953.

Soloway, who correctly predicted a sell-on-the-news event for spot Bitcoin ETF approval back in October, told Kitco News Lead Anchor and Editor-in-Chief Michelle Makori that it was just previous Bitcoin Trading pattern works.

“If we go back to the high of the 2017 Bitcoin bull market, that’s when futures basically made their debut,” Soloway said. “There was a lot of hype that brought this news to our attention. And that was the climax of the cycle. If we hit the first peak of 2021, that would be the Coinbase IPO. And that marked the climax. These big news stories create so much hype and the top of Bitcoin.”

The breakdown of ETF inflows and outflows provides additional information about market activity.

According to the latest Bloomberg data, BlackRock and Fidelity have dominated the Bitcoin ETF flow competition with about $2.1 billion and $1.8 billion in inflows, respectively. On the other hand, Grayscale Bitcoin Trust (GBTC) – the world's largest cryptocurrency fund with $20.2 billion in assets – has seen outflows of around $4.8 billion since converting into an ETF.

“GBTC is selling Bitcoin – a lot of smart money that was bought before this news. GBTC was trading at a big discount, so it was an added bonus for them too. You take profits. And that leads to this downward movement.” Soloway noted.

Another reason for the outflows is GBTC's 1.5% fee, which is significantly higher than its competitors. In comparison, BlackRock and Fidelity's fees are 0.25% after an exemption period. “So there will be a certain amount of money that sells the GBTC and then ends up flowing into these other ETFs that have much lower fees,” Soloway said.

This is the next risk for Bitcoin

Soloway noted that Bitcoin sales are expected to level out over the next few weeks, but warned that the cryptocurrency could face further risk.

“My biggest fear, and this is the only case I have for Bitcoin, is what happens if we hit a market high on the S&P? What happens if we experience a de-risking event in the overall markets, in the equity markets?” Soloway asked.

A stock market selloff could cause even more trouble for spot Bitcoin ETF inflows as people become fearful. “I'm worried that Bitcoin could fall again. If we were to see a 50% drop in the stock market, I see Bitcoin retesting $15,000,” Soloway said.

The stock market has performed well so far this year, with the S&P 500 and Dow hitting new all-time highs and the Nasdaq trading close to record highs. However, Soloway said that previous Bitcoin trading patterns point to a possible top for the market.

“Right now we are seeing new all-time highs almost every day. But why is Bitcoin stagnating? One thing I would like to point out is that if you look at past Bitcoin cycles, the peak was in December 2017. Six weeks later, in early 2018, the S&P peaked. Looking at 2021, Bitcoin's high of $69,000 was reached in November, and six weeks later the S&P peaked. I'm a little on alert here. Now let’s look at what’s happening “It’s happening in the next three-plus weeks,” he explained.

Soloway also stressed that the mainstream narrative about the market's solid performance is wrong, noting that only the technology sector is performing well.

For Soloway's technical analysis of the stock market and the specific levels he observes on the Nasdaq, Watch the video above.

If the Bitcoin sell-off begins, Soloway would buy more at the first level, namely at $30,000 to $32,000. However, there is a possibility that the value could fall even further. For his assessment of the timing of the bearish move, the potential price bottom, and the long-term upside potential: Watch the video above.

Soloway remains bullish on the gold market in 2024; for its price forecast, fundamental drivers and technical analysis, Watch the video above.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a request to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for any loss and/or damage arising from the use of this publication.