Bitcoin Price Prediction: Drops to $39,650 Amid Unconstitutional Canadian Law & GBTC Withdrawals

Arslan Butt
Last updated: | 3 min read

Given the ongoing events in the crypto market, the latest Bitcoin price prediction has become increasingly complex as BTC dips to $39,650, influenced by a blend of regulatory news and investment product dynamics.

On Wednesday, Bitcoin registered a notable decline, trading at $39,653, marking a 1% decrease.

Contributing to this decline is a legal development from Canada. A law stopping cryptocurrency donations to demonstrators was ruled unconstitutional.

At the same time, increased withdrawals from the Grayscale Bitcoin Trust (GBTC) add further downward pressure. This highlights Bitcoin’s sensitivity to political and market forces.

Canadian Law Blocking Crypto Donations Ruled Unconstitutional


The Federal Court of Canada has deemed the Canadian government’s use of emergency powers to freeze cryptocurrency donations for truckers protesting as illegal. In February 2022, in reaction to the “Freedom Convoy” protests against COVID-19 restrictions, Prime Minister Justin Trudeau’s government employed the Emergencies Act to halt financial assets, including cryptocurrencies.

 

The court deemed the measure unreasonable and unjustified, stating that it didn’t qualify as a national emergency. The Canadian Civil Liberties Association celebrates this as a landmark decision. They stress that the Emergencies Act should be a last resort.

Despite Finance Minister Chrystia Freeland’s intention to appeal, this ruling highlights the need for judicial oversight in government actions on cryptocurrencies.

Given these legal challenges and the changing government view on cryptocurrency donations, Bitcoin’s involvement in funding protests may face more scrutiny and cause price volatility.

GBTC Withdrawals Intensify Downward Pressure on Bitcoin


Bitcoin has dipped below the $39,000 threshold, marking a two-month nadir largely attributed to significant investor pullbacks from Grayscale’s Bitcoin Trust (GBTC). Since its transition to a spot Bitcoin exchange-traded fund (ETF) on January 11, GBTC has seen an exodus of funds exceeding $3.4 billion.

The persistence of this withdrawal trend raises market apprehension. Eric Balchunas, an ETF analyst at Bloomberg, reported a staggering $515 million withdrawal on January 23, leading to a 13% reduction in GBTC shares in circulation.

Despite some indications of the outflow abating, there remains a looming concern over potential further losses. The bulk of these recent outflows is ascribed to the beleaguered exchange FTX, which offloaded a significant quantity of its GBTC holdings.

Bitcoin Price Prediction

On January 24, Bitcoin (BTC) edged up modestly, marking a 0.33% increase to trade at $39,720. The digital currency, amid a volatile market environment, is approaching its pivot point at $39,947, delineated by the green line on the 4-hour chart.

BTC/USD is facing immediate resistance at $40,884, with subsequent barriers at $41,791 and a more formidable one at $43,394, which could cap upward movements. On the downside, support is initially found at $38,618. Should bearish momentum intensify, further supports at $37,638 and $36,745 may come into play.

Bitcoin Price Chart - Source: Tradingview
Bitcoin Price Chart – Source: Tradingview

The Relative Strength Index (RSI) is currently at 44, indicating neither overbought nor oversold conditions, suggesting a potential for movement in either direction. The 50-Day Exponential Moving Average (EMA) is at $40,494, slightly above the pivot point, hinting at a tussle between bullish and bearish sentiments.

Chart analysis reveals a double top pattern with resistance looming around $39,950. Should Bitcoin fail to break through this level, a selling trend could be triggered. The overall trend for Bitcoin remains bearish as long as it stays below the $40,000 threshold.

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