Bitcoin falls to 7-week low

The world's largest cryptocurrency fell about 20% after the ETF wave when it was under great profit-taking pressure and was less enthusiastic than the performance of the stock channel.

Bitcoin has had three consecutive days of declines. Since last night, the world's largest cryptocurrency has fallen below $41,000 per unit. By around 3am this morning (January 23), the price had fallen to nearly $39,500, then recovered but continued to fall below this mark. Since this morning, Bitcoin has fluctuated around the $40,000 mark.

The cryptocurrency has fallen 2.9% in the past 24 hours, hitting a low of $39,424 a unit, its lowest level since early December. Compared to the surge in prices when Bitcoin ETFs were approved in the US, the decline has reached 20%. More than $128 billion in market capitalization has also been wiped out in less than two weeks.

Red also dominated the board. The world's second largest cryptocurrency, Ether, also fell 6% this morning to $2,328. Binance Coin, Solana, and XRP also fell in price.

In addition to the "buy the rumor, sell the news" strategy, cryptocurrencies are also declining because they are having difficulty competing with traditional stocks after the S&P 500 index hit a record thanks to the surge in semiconductor and technology stocks.

“It feels like Bitcoin investors are going up an escalator at a decreasing rate, while traditional channels are moving more easily to reach record highs,” said Antoni Trenchev, co-founder of crypto lending company Nexo.

He noted that previous major events in the cryptocurrency market, including the Coinbase IPO and the launch of Bitcoin futures, were often followed by a decline. That scenario is repeating itself now.

After nearly two weeks of operations, spot ETFs have seen significant inflows, with the two largest funds from BlackRock and Fidelity reaching more than $1 billion in assets under management. However, this figure is quite similar to the billions of dollars in capital outflows from Grayscale Investments’ trust, which converted to an ETF on January 11. The reason is that investors are taking profits or switching to lower-cost channels. According to Trenchev, Bitcoin is also under pressure from this cash flow.

A recent report from market research firm 10x Research suggests that any ETF-related price surge in the first quarter of 2024 will be “fake.” The rally, the analysts say, will only lead to Bitcoin’s early decline to $38,000 in March. The current market price is only about $1,500 away from that figure.

Xiao Gu (according to CoinDesk , Reuters )

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