Bitcoin Falls Below $40,000 to Lowest Level Since December
Bitcoin continued its decline on Tuesday, dropping below $40,000 to reach its lowest point since the beginning of December. The cryptocurrency’s price was down almost 2% at $39,362.00, adding to its 4% decrease from the previous day. According to FactSet, Bitcoin has fallen approximately 19% from its high of $49,048 after the approval of ETFs.
Selling Pressure from Grayscale Bitcoin Trust Outflows
Some analysts attribute the short-term selling pressure to exits from the Grayscale Bitcoin Trust (GBTC), which has seen around $2 billion in outflows since January 19. However, inflows into other ETFs like BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund have offset the GBTC outflows by $1.2 billion so far. This outflow is mainly affecting the market psychologically, says Yuya Hasegawa, a crypto market analyst at Bitbank.
Correction Expected After Bitcoin ETF Approval
The recent correction in Bitcoin’s price was anticipated by many investors as a “sell the news” phenomenon following the approval of bitcoin ETFs. Traders are currently holding onto unrealized profits, and experts suggest that Bitcoin has further room for decline before it can reverse its trend. Chart analysts believe that $36,000 is a crucial support level to monitor in the near term. Nevertheless, they still anticipate a new all-time high for Bitcoin this year.
Crypto Market Follows Bitcoin’s Decline
Bitcoin’s downward movement has also impacted other cryptocurrencies. Ether fell 7% to $2,170.55, Solana slid 7%, Uniswap’s token dropped 7%, XRP fell 5%, and dogecoin lost 6%. Additionally, crypto-related equities experienced pressure, with Microstrategy down 4%, Marathon Digital and Riot Platforms each falling about 2%, and Coinbase slipping 4% due to a downgrade by JPMorgan.
Hot Take: Bitcoin’s Price Drops Below $40,000, Reflecting Market Correction
Bitcoin’s recent decline below $40,000 signals a market correction following the approval of bitcoin ETFs. The outflows from Grayscale Bitcoin Trust have contributed to short-term selling pressure, but inflows into other ETFs have offset the impact. Traders are currently waiting for further price declines before a potential reversal. This downward movement has also affected other cryptocurrencies and crypto-related equities. Despite the current correction, experts still anticipate a new all-time high for Bitcoin in the future.
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