The Bitcoin Price Plunges Below $40,000
The price of Bitcoin (BTC) has dropped below $40,000 for the first time since early December, marking a nearly 20% pullback from its post-spot Bitcoin ETF approval highs. As of now, the BTC price is just above $40,000, having shed over 3.5% since the start of the day.
FTX Sells $1 Billion of GBTC Holdings
FTX, which is currently going through bankruptcy proceedings, allegedly sold around $1 billion of its Grayscale Bitcoin Trust (GBTC) holdings after the approval of spot Bitcoin ETFs. This explains a significant portion of the outflows from the newly converted ETF. GBTC has seen approximately $2 billion in outflows since converting to a spot ETF.
Newly Launched Spot Bitcoin ETFs Attract Inflows
Newly launched spot Bitcoin ETFs from BlackRock and other competitors have seen inflows of more than $4 billion. While overall net flows have been positive, the outflows from Grayscale have exceeded expectations, causing some concern among investors.
Here’s How Low the Bears Could Bury the Bitcoin Price
The approval of spot Bitcoin ETFs in the US has been a significant event for Bitcoin. It allows investors in the US to gain direct exposure to Bitcoin price movements without owning any Bitcoin themselves. Although this is expected to generate new demand from retail and institutional investors in the long term, it hasn’t prevented a decline in price following excessive optimism leading up to the ETF approvals.
Chart analysis suggests that the Bitcoin price decline may continue. Breaking support levels at around $40,000 could lead to a test of November highs at $38,000. If these levels are broken, the price could drop further to the long-term support-turned-resistance zone between $32,000 and $33,000.
Will Bulls Buy the Dip?
Despite the recent price drop, the bull case for Bitcoin remains strong. The introduction of spot Bitcoin ETFs adds a new source of long-term demand, while the upcoming halving will reduce sell pressure from miners. Additionally, it is highly likely that there will be interest rate cuts by the Federal Reserve in 2024, improving liquidity conditions as demand rises and supply decreases. This creates a bullish outlook for Bitcoin.
Hot Take: Bitcoin Price Plunges Below $40,000
The recent plunge in the Bitcoin price below $40,000 has caused concern among investors. With a nearly 20% pullback from post-ETF launch highs, many are wondering how low the bears could push the price. The approval of spot Bitcoin ETFs was expected to drive new demand, but it seems to have triggered profit-taking instead. Chart analysis suggests that further decline is possible, with key support levels at $38,000 and $32,000. However, despite the current dip, the long-term bullish case for Bitcoin remains strong with new sources of demand and reduced sell pressure on the horizon.
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