Bitcoin (BTC) attempted a rally this morning from $3,580 to $3,620, but downward pressure kicked in, and Bitcoin declined back to $3,580. In the afternoon, news broke that the VanEck SolidX Bitcoin exchange traded fund (ETF) had been withdrawn, meaning there will be no Bitcoin ETF for the foreseeable future. This announcement coincided with a downward movement to $3,520, but now Bitcoin has recovered to $3,550 as of this writing.
Overall, Bitcoin is down one percent on the day, and several major cryptocurrencies have followed Bitcoin downwards. Ripple (XRP) is down 1.3 percent, Ethereum (ETH) is down 1.6 percent, EOS is down 1.4 percent, Stellar (XLM) is down 2.2 percent, Bitcoin SV (BSV) is down 0.6 percent, IOTA is down 3.5 percent, Monero (XMR) is down 2.4 percent, Dash is down 1.6 percent, and Dogecoin (DOGE) is down 0.8 percent.
Not all major cryptocurrencies are down today ho, ever. Bitcoin Cash (BCH) is up 2.2 percent, Litecoin (LTC) is up 0.3 percent, and Tron (TRX) is up 0.9 percent. The bears have won the day though, and the total crypto market cap has declined from $121 billion to $119.5 billion. Most of this market cap decline happened following the news that the VanEck SolidX Bitcoin ETF had been withdrawn.
The fact that the $3,500 Bitcoin support level is holding strong despite this negative ETF news may be a bullish indicator. The $3,500 level has been in place since Dec. 19 and may be a sign that a bottom is forming. Further, the CME and CBoE Bitcoin futures markets are experiencing backwardation, meaning people are paying more to get Bitcoin now rather than later, which can be a bullish sign. Also, the Wyckoff chart suggests a bottom will be happening right around the beginning of February.
One major factor that may be suppressing a Bitcoin and crypto rally is the CME Bitcoin futures expiration on Jan. 25. It is clear that futures traders took out short positions at $3,900 at the beginning of the month, and it will be hard for Bitcoin to rally until the expiration is done, since usually Bitcoin declines into the expiration on months where traders went short.
The fact that $3,500 is holding strong right before the CME expiration is a positive sign since it may mean that short selling cannot push the market lower. This would mean that, in February, CME Bitcoin futures traders — and other futures traders — could go long which could spark a rally. It will take up to a week after the Jan. 25 expiration to know for sure which way futures traders are betting, however.