Bitcoin Falls as Investors Take Profits After December Rally
Bitcoin experienced a drop in price on Monday as investors decided to take profits following its rally in December. The cryptocurrency’s price, according to Coinbase, was down by about 5% at $41,557.62 after a significant decline on Sunday night that brought it as low as around $40,300. Last week, Bitcoin reached above $44,000 and remained just below that level over the weekend.
Other Cryptocurrencies Affected
Ether fell approximately 7% on Monday to $2,205.11, while Solana’s SOL token and Ripple’s XRP lost about 7% and 6%, respectively. Coin Metrics reported that both Bitcoin and Ether are headed for their worst days since August 18 and March 9, respectively.
Crypto equities were also impacted by the market downturn. Coinbase and MicroStrategy each fell by around 6%, while bitcoin miners experienced double-digit losses. Riot Platforms and Marathon Digital, the largest mining stocks, dropped by 12% and 11%, respectively. CleanSpark and Iris Energy, which are popular on Wall Street, saw declines of 15% and 11%, respectively.
Possible Factors Behind the Price Drop
Bitcoin had seen a 12% increase in December amid speculation that the U.S. Securities and Exchange Commission (SEC) might approve the first spot bitcoin exchange-traded fund (ETF) in early January. If launched, Galaxy Digital estimates that a U.S. bitcoin ETF could have an addressable market size of about $14 trillion in its first year and grow to about $26 trillion in its second year.
The sudden drop triggered liquidations, with $120 million in long liquidations for bitcoin and $86 million for ether over the past 22 hours, according to CoinGlass.
Analysts Remain Optimistic
Despite the recent pullback, analysts believe there is still momentum in the current bitcoin uptrend. They argue that the cryptocurrency would need to fall further for them to reconsider the strength of the rally.
In addition to a potential ETF approval, investors are also looking forward to the Bitcoin halving in spring 2024 and monitoring moves by the Federal Reserve for clues about possible rate cuts in 2024.
Hot Take: Bitcoin’s Price Drops as Investors Take Profits After December Rally
The price of Bitcoin has fallen as investors decided to take profits following its rally in December. Other cryptocurrencies like Ether, Solana’s SOL token, and Ripple’s XRP also experienced declines. The drop triggered liquidations in both bitcoin and ether. Despite this setback, analysts believe that there is still momentum in the current bitcoin uptrend and that the strength of the rally remains intact. Investors are eagerly awaiting a potential approval of a spot bitcoin ETF by the SEC, which could have significant market implications. They are also keeping an eye on future events such as the Bitcoin halving in spring 2024 and any potential rate cuts by the Federal Reserve.
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