Bitcoin continued its recent decline falling below the $40,000 mark for the first time in 2024 and dragging the entire cryptocurrency market down alongside it.
The leading crypto was trading at $39,600 at the time of writing which is a 7.3% drop in the last 7 days. It previously hit a low of $39,414.80, marking its lowest point since December 2023.
Ether experienced a 13% decline in the last 7 days.
BTC in the last 24hrAccording to analysts, Bitcoin is undergoing a correction phase, which began after the introduction of several spot bitcoin exchange-traded funds (ETFs) in the United States. In the period leading up to the approval by the U.S. Securities and Exchange Commission for trading to commence, investors actively purchased bitcoin in anticipation of the regulatory approval.
However, since the date of the SEC approval on January 10 2024, Bitcoin has experienced a 14% decline. In contrast, Ether, which has been showcasing better performance than Bitcoin, has managed to maintain a 3% increase over the same timeframe.
Some analysts contend that ETH was benefitting from a new narrative shift, with speculation that a spot ETH ETF was now being pursued by institutional investors.
Aside from the two, SOL which has experienced the most gains in the last 2 months among the top 10 cryptos, saw the most significant decline among major cryptocurrencies in the last 24 hours. The token has dropped nearly 10%, reaching a low of $83.76 in the period.
The drop in Bitcoin’s price stands in stark contrast to the high expectations that preceded the SEC’s decision. Bitcoin ETFs were anticipated as a more accessible avenue for regular individuals to invest in Bitcoin, sparking excessively optimistic predictions for BTC’s price.
According to analysts, the now-defunct cryptocurrency exchange, FTX, has recently managed to sell close to $1 billion in shares from Grayscale’s GTBC fund, and this is possibly the key driver of selling pressure. This substantial transaction occurred following the conversion of the fund’s instrument to trade as a spot bitcoin ETF.
There have been previous occurrences of Bitcoin prices declining in the wake of long-awaited positive developments. For instance:
- In April 2021, there was a significant 15% sell off following the public debut of the cryptocurrency exchange, Coinbase.
- Similarly, in October 2021, there was an almost 10% drop in Bitcoin prices after the approval of the first ETFs linked to Bitcoin futures contracts.
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