The price of Bitcoin has recorded a drastic fall and has crashed towards $40K. Even though there have been different attempts to recover from the fall, the bear seems to have the upper hand in the market now. Taking the reports from the past 7 days, there has been a decline of 4.4% in the price of Bitcoin. The reports from January 11 also show that the price of the coin has fallen from $48,500, down to almost 16%.
As the different measures to recover from the fall have not been of great help, people are eager to know whether the value will go higher or whether it will continue to drop. While heated discussions are going on about the issue, here we will look into some of the different possible reasons that are said to be behind this fall.
The Underwhelming Bitcoin ETF Launch
Even though multiple ETF providers have been trying for the Spot Bitcoin Exchange-traded funds, it has only been just weeks after the US Securities and Exchange Commission granted permission for it. The product was granted by the Commission on January 11, 2024, and there were a few different intentions that affected the launch.
One of the major reasons was associated with the X account of the agency. A few days before the official confirmation or announcement of the product, the X account of the United States Securities and Exchange Commission was compromised.
The ones who had control of the account posted news that stated that the ETF was finally approved. With the news out in the public, it started a bidirectional price spiral and as a result, assets that were worth millions of dollars of leveraged positions were liquidated.
The problems didn’t seem to stop there. SEC had to later take down the link containing the official order because it was posted during trading hours as opposed to the original plan of posting it after trading hours.
With these events in the background, the price of Bitcoin saw a massive surge the following day and it even reached the limit of $48,500, the peak price in January. However, the ETF inflows failed to compensate for the selling pressure which continues to be in play and has brought the value of BTC to around $40K.
Overheated Crypto Markets
This is stated to be yet another reason for the massive fall in the value of BTC. Looking into the performance of the crypto market before this massive fall, it can be easily seen that the market had been trending upward and that too, without any considerable corrections for quite a long period of time.
One of the major reasons that is associated with this increase is the action that people had in the Spot BTC ETF which was under the consideration of the United States Securities and Exchange Commission.
Looking into the available data, the value which was marked at $26K in mid-October saw a massive rise and reached the value of $48,500K by January, and that too, almost without any corrections. This 86% increase in the value is quite massive. Along with this, the Crypto Fear & Greed Index has also been signaling an overheated market for quite a long time.
Many prominent personalities in the file have expressed their opinions on the current situation. According to the statement made by the Market Desk of CoinSwitch, the market only goes up when there is sufficient fear, and it seems like people are now starting to get afraid. It was also added that BTC must stay above the mark of $32K for the bulls to make a comeback.
Edul Patel, the CEO of Murdex stated that the current support was at $39,500 while the resistance points are at $40,700 which is followed by $42,700. He also added that overcoming these resistance points is an essential criterion that Bitcoin should meet to reestablish stability and also show potential signs of recovery. As per the latest available data, the market cap of Bitcoin, which is the largest cryptocurrency in the world has declined to around $783 billion.