Bitcoin Falls Below $40,000, Dragging Down Crypto Market
Bitcoin experienced further losses on Monday as it dropped below $40,000 for the first time this year, causing a ripple effect across the entire crypto market. Coin Metrics reported that the price of bitcoin was down 3.9% at $40,052.76, reaching its lowest level since December 3 when it fell to $39,414.80. Ether also took a hit, dropping 5% to $2,333.00.
Correction Phase Following ETF Launch
The current correction phase for bitcoin can be attributed to the recent launch of spot bitcoin exchange-traded funds (ETFs) in the United States. Investors had been buying bitcoin in anticipation of the SEC’s approval to begin trading these ETFs. Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, commented that the pullback seen in bitcoin’s price was expected and likely a “sell-the-news” reaction before the cryptocurrency resumes its bullish trajectory.
Bitcoin’s Downward Trend
Since January 10, when the SEC gave its approval for bitcoin ETFs, bitcoin has fallen by 14%. However, ether has managed to outperform bitcoin and is still up 3% during the same period. Chart analysts have warned that while bitcoin’s long-term uptrend remains intact, there is still a possibility of further decline. Experts such as Katie Stockton from Fairlead Strategies and Rob Ginsberg from Wolfe predict that bitcoin could dip to as low as $36,000 but won’t stay there for long.
Crypto Market Declines
Other cryptocurrencies also experienced significant declines on Monday. Solana’s sol token dropped by 7%, Ripple’s XRP fell by 4%, and the token associated with the DeFi protocol Uniswap declined by 5%.
Hot Take: Bitcoin’s Correction Phase Following ETF Launch Leads to Price Dip
Bitcoin’s recent dip below $40,000 can be attributed to its correction phase after the launch of spot bitcoin exchange-traded funds in the U.S. The approval by the SEC led investors to anticipate a rise in bitcoin’s price, causing them to buy in advance. However, once the news was confirmed, some investors decided to sell their holdings, resulting in a temporary pullback. Despite this dip, experts believe that bitcoin will regain its bullish trajectory in the near future.
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