Bitcoin Drops below $40,000, The Lowest Since the Release of the Bitcoin ETF

By Brylle Uytiepo • January 23, 2024

Bitcoin Drops below $40,000, The Lowest Since the Release of the Bitcoin ETF

Monday saw a sharp decline in Bitcoin, which fell to a seven-week low and broke below $40,000 for the first time since the January 11 launch of 11 spot Bitcoin exchange-traded funds (ETFs). This starkly contrasts the hope that propelled Bitcoin’s increase ahead of the Securities and Exchange Commission (SEC) of the United States allowing Bitcoin exchange-traded funds (ETFs).

The Fall and Current Situation of Bitcoin

After a brief period of recovery, the largest cryptocurrency in the world, Bitcoin, was down 3.98% as of Monday, trading at $39,938.00, its lowest level since December 4. At the same time, Ether, the second-biggest cryptocurrency, dropped by 6.37% to $2,328.30. The decline comes after a period of significant gains, with Bitcoin rising by about 70% since August, when a federal court ordered the SEC to reevaluate its decision to reject Grayscale Investment’s application for a bitcoin ETF.

Forecasts and observations made by analysts

Some analysts predicted a correction after the spike in anticipation of the introduction of bitcoin exchange-traded funds (ETFs), while others cited Bitcoin’s inability to compete with traditional equities. The robust performance of semiconductors and other IT sectors lifted the S&P 500 benchmark index to new record highs on Monday. Coinlender Nexo co-founder Antoni Trenchev said, “It feels like investors in bitcoin are running up a descending escalator right now as traditional financial benchmarks enjoy the easier ride to record highs.”

Past Patterns and Influences

Trenchev drew attention to a pattern in which Bitcoin suffered comparable declines during earlier significant crypto events, such as the introduction of bitcoin futures and the initial public offering of cryptocurrency exchange Coinbase. With the SEC’s approval of other bitcoin ETF products earlier in the month, Grayscale Investment’s bitcoin trust saw withdrawals that put additional pressure on Bitcoin. According to CoinDesk, FTX, which declared bankruptcy in 2022, sold 22 million shares of the ETF for around $1 billion, adding even more complexity to the problems facing cryptocurrencies.

The recent drop in the price of Bitcoin to $40,000, the lowest since the introduction of bitcoin exchange-traded funds (ETFs), highlights the difficulties and unpredictabilities that continue to influence the cryptocurrency market. Market players and investors will be closely observing how Bitcoin handles these challenges and whether it can stabilize itself in the face of changing market dynamics.

Spread the Word

Leave a Comment

Your email address will not be published. Required fields are marked *

Sign up for our newsletter

We simplify the market into actionable insights every week

Your subscription could not be saved. Please try again.
Your subscription has been successful.