Bitcoin continued its recent decline, falling below $39,000 on Tuesday.
This marks the world’s largest cryptocurrency’s lowest level since December and comes after a 2.5% drop to $39,163.22, CNBC reported Tuesday (Jan. 23). The cryptocurrency had already experienced a 4% loss the previous day when it briefly dipped below $40,000, a first for this year.
This decline represents a more than 20% drop from its recent high of $49,048 that followed the Securities and Exchange Commission’s (SEC) approval of bitcoin exchange-traded funds (ETFs) on Jan. 10, the report said, citing data from FactSet.
The approval of bitcoin ETFs came after years of opposition to the idea of an ETF that invests in bitcoin and was heralded by figures throughout the cryptocurrency industry, PYMNTS reported Jan. 10.
Analysts have attributed the short-term selling pressure to exits from the Grayscale Bitcoin Trust (GBTC), which has seen approximately $2 billion in outflows since Friday (Jan. 19), according to the CNBC report. However, other bitcoin ETFs, such as BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund, have seen inflows of more than $1 billion each, offsetting the outflows from GBTC.
Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank, said that the outflow from GBTC should not have a significant impact as the inflow into other ETFs has offset the outflow by $1.2 billion so far, per the report. However, the large daily outflows from GBTC appear to be affecting the market psychologically.
This recent correction was anticipated by many investors as a “sell the news” phenomenon following the long-anticipated approval of bitcoin ETFs, according to the report. Expectations around the event emerged last summer and intensified in August, pushing the bitcoin price steadily higher.
Now, traders are holding onto large unrealized profits, and analysts believe that bitcoin’s price still has a long way to fall before reversing higher, the report said. Chart analysts have identified $36,000 as the support level to watch in the near term.
Despite the recent decline, chart experts remain optimistic about bitcoin’s long-term prospects, per the report. They believe that a new all-time high for bitcoin is still within reach this year.
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