Bitcoin [BTC] has declined over 5% to $42,600 since spot ETFs debuted in the U.S. on Thursday in what appears to be a classic "sell the fact" price action.

The sell-off could continue over the near term, according to analysis of bitcoin's price patterns and technical indicators by 10x Research.

"Bitcoin's RSI divergence signals correction," 10x Research, led by Markus Thielen, said in a note to clients Monday, adding the pullback could run out of steam near the dynamic support level of $38,000.

A bearish divergence occurs when prices reach a new extreme and momentum indicators like the relative strength index (RSI) don't, hinting at upside exhaustion.

BTC hit a two-year high above $49,000 last week, which the 14-day RSI failed to confirm, as seen in the chart below. The subsequent price drop has validated the bearish divergence.

The RSI produced a lower a high last week as prices topped $49,000 for the first time since December 2021. (TradingView/CoinDesk)

The MACD histogram, used to gauge trend strength and changes, has crossed below zero, signaling a bearish shift in momentum.

Per Thielen, investors in Grayscale's ETF, the Grayscale Bitcoin Trust (GBTC), switching to other low-fee options will likely weigh over bitcoin's price. While Grayscale charges 1.5%, other asset managers like BlackRock charge 0.25%. GBTC, formerly a close-ended trust, is one of the largest bitcoin holders, with a coin stash of over $27 billion. GBTC shares began trading in 2013 and became redeemable on Jan. 11.

"Grayscale is betting that investors will slowly switch out of their 1.5% annual management fee ETF offering (due to tax consideration) instead ofchoosing other reputable companies that offer 80% less in fees. There has been much negative news around the parent company DCG and Grayscale itself, notably charging a 2.0% management fee on a product that [at one point] traded at a 50% discount to its net asset value – therefore overcharging GBTC holders ($27bn market cap)," 10x said.

"Investors will first sell before they transfer their BTC exposure to another ETF issuer. This will cause downside pressure for Bitcoin and remain an overhang," 10x added.

Bitcoin Technical Analysis

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.