The world's largest cryptocurrency fell by about 20% after the ETF surge, facing significant profit-taking pressure and underperforming compared to the stock market.
Bitcoin has closed lower for three consecutive days. Since last night, the world's largest cryptocurrency has fallen below $41,000 per unit. Around 3 AM this morning (January 23rd), the price dropped sharply to near $39,500, before recovering but then falling back below that mark. Since this morning, Bitcoin has been fluctuating around the $40,000 mark.
This cryptocurrency has fallen 2.9% in the last 24 hours, at one point hitting a low of $39,424 per unit, its lowest level since early December. Compared to the price surge when Bitcoin ETFs were approved in the US, the drop has reached 20%. More than $128 billion in market capitalization has also been wiped out in nearly two weeks.
Red also dominated the trading screen. The world's second-largest cryptocurrency, Ether, also dropped 6% this morning to $2,328. Binance Coin, Solana, and XRP also fell in price.
Besides the "buy the rumor, sell the news" strategy, the decline in cryptocurrencies is also due to difficulties competing with traditional stocks after the S&P 500 index reached record highs thanks to the surge in semiconductor and technology stocks.
Antoni Trenchev, co-founder of cryptocurrency lending company Nexo, said: "It feels like Bitcoin investors are climbing an escalator at a slowing pace, while traditional channels are moving more easily to reach record highs."
He noted that previous major events in the cryptocurrency market, including the Coinbase IPO and the launch of Bitcoin futures, have often been followed by a sharp decline. This scenario is repeating itself at the present time.
After nearly two weeks of operation, spot ETFs have seen significant inflows. The two largest funds, from BlackRock and Fidelity, have reached over $1 billion in assets under management. However, this figure is quite similar to the billions of dollars in outflows from Grayscale Investment's trust fund, which converted into an ETF on January 11th. This is due to investors taking profits or shifting to lower-cost channels. According to Trenchev, Bitcoin is also under pressure from this capital flight.
A recent report by market research firm 10x Research suggests that any price surge related to ETFs in the first quarter of 2024 will be "false." According to the analysis team, such surges would only prematurely push Bitcoin down to $38,000 in March. The current price is only about $1,500 away from that figure.
Xiao Gu (according to CoinDesk , Reuters )
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