Bitcoin Hits Seven-Week Low Below $40,000
Bitcoin has fallen to a seven-week low, dropping below $40,000 for the first time since the launch of 11 spot bitcoin exchange-traded funds (ETFs) on January 11. The world’s largest cryptocurrency is currently trading at $39,938.00, down 3.98% and at its lowest level since December 4. Ether, the second largest cryptocurrency, is also down 6.37% at $2,328.30.
Bitcoin’s Rally and Challenges
Bitcoin experienced a rally as anticipation grew around the approval of bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC). This would have opened up the cryptocurrency to new investors. However, bitcoin’s gains are now being pared back after a surge of around 70%. Some analysts had predicted this correction.
Market-watchers have noted that bitcoin is struggling to compete with traditional stocks, particularly after the S&P 500 index reached record highs driven by tech stocks. Antoni Trenchev, co-founder of crypto lender Nexo, compared it to running up a descending escalator while traditional financial benchmarks soar.
The Impact of Grayscale Investment’s Bitcoin Trust
Bitcoin has also been affected by outflows from Grayscale Investment’s bitcoin trust. When the SEC approved other bitcoin ETF products earlier this month, Grayscale Investment’s trust was converted into an ETF. FTX, which entered bankruptcy in 2022, has reportedly sold 22 million shares worth nearly $1 billion in the ETF.
Trenchev believes that spot bitcoin ETFs are in danger of becoming infamous due to these challenges and events.
Hot Take: Bitcoin Faces Challenges Amidst ETF Launch
Bitcoin’s recent drop below $40,000 marks a seven-week low, following the launch of several spot bitcoin ETFs. Despite initial excitement over the potential approval of bitcoin ETFs by the SEC, bitcoin is now facing challenges in competing with traditional stocks. The surge in traditional financial benchmarks, such as the S&P 500 index, has overshadowed bitcoin’s performance. Additionally, outflows from Grayscale Investment’s bitcoin trust and the bankruptcy-related sale of shares by FTX have further pressured bitcoin. As a result, spot bitcoin ETFs may be heading towards infamy rather than success.
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