The price of bitcoin slips below $42,000
The price of bitcoin has fallen below the $42,000 mark in the past 24 hours, declining by 3% to $41,998. This downward movement can be attributed to increased sell pressure on the cryptocurrency. Data from CryptoQuant shows that over 25,000 bitcoins have been transferred from cold wallets to exchanges, which affects the liquid supply of the asset and influences its price dynamics. Additionally, The Block’s data reveals an increase in transaction activity among short-term holders of bitcoin.
Bitcoin network transactions reach all-time high
The number of transactions on the bitcoin network has reached a record high of 633,000. This surge in transaction volume has also led to a daily trading volume of over $28 billion. Although this is lower than the mid-December peak of over $38 billion, it is still significantly higher than the trading volume seen in November and October. The increased volatility in the bitcoin market has resulted in the liquidation of over $44 million in leveraged positions, primarily shorts.
Approval of spot bitcoin ETFs expected
Bitcoin has gained over 155% year-to-date, driven by optimism surrounding the potential approval of spot bitcoin exchange-traded funds (ETFs) by the Securities Exchange Commission (SEC). Several firms are awaiting regulatory approval for their ETF applications. Analysts predict that spot bitcoin ETFs could be approved in the first quarter of 2024. However, ETC Group Head of Research André Dragosch believes that while initial approvals may cause a short-term price spike, gradual capital inflows into bitcoin will eventually double its price in 2024.
Hot Take: Bitcoin faces sell pressure as transactions spike
The recent decline in bitcoin’s price below $42,000 indicates increased sell pressure on the cryptocurrency. This can be attributed to the movement of over 25,000 bitcoins from cold wallets to exchanges, which affects the liquid supply and price dynamics of the asset. Additionally, there has been a surge in transaction activity on the bitcoin network, reaching an all-time high of 633,000 transactions. Despite this volatility, bitcoin continues to gain year-to-date, driven by expectations of spot bitcoin ETF approvals by the SEC. While initial approvals may result in a short-term price spike, gradual capital inflows are expected to double bitcoin’s price in 2024.
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