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Crypto Market Starts Correction After Bitcoin ETFs Fever
01/19/2024

Crypto Market Starts Correction After Bitcoin ETFs Fever

01/19/2024
4,5

Cryptocurrencies remain underselling pressure after Bitcoin ETFs fever, and traders are speculating what's next.

The cryptocurrency market is witnessing a massive correction after an incredible surge amid the hype surrounding the approval of spot Bitcoin ETFs. Market capitalization fell from $1.82 trillion to $1.66 trillion. From a technical point of view, the total market capitalization has broken away from the channel support trend line and continues its fall. Experts forecast a further fall of 12.6% to $1.40 trillion.

Bitcoin rolled back to its lowest level since December 18 to $40,601. BTC's drop negatively affected other altcoins as well as stocks. There are several reasons why cryptocurrency trading volumes have declined. The most non-obvious one is the strengthening of the US dollar, which is putting pressure on Bitcoin. The U.S. Dollar Index (DXY) reversed in early January and reached a notable level, trading at 103.50 on Jan. 18.

Treasury bond demand and yields are also seeing an increase. This suggests that markets are correcting their bets on future interest rates from the Fed. Recent macroeconomic data such as consumer price index inflation, job creation rates and wages rose and economic activity remained strong. All of this strengthened the dollar, which in turn put pressure on the entire cryptocurrency market.

The downward momentum was solidified by the unexpected liquidation of more than $137 million in leveraged bull positions. And Grayscale Bitcoin Trust (GBTC) has seen outflows amid a conversion to a spot ETF structure. This allowed investors to close positions and withdraw Bitcoins. The decision led traders to withdraw more than 8,700 Bitcoins totaling $380 million in a short period of time.

Another reason for the correction is the decrease in the hype related to Bitcoin ETFs. Investors are now preparing for the halving, which is to take place in April. Therefore, short-term traders and miners are adjusting their positions after impressive results over the past few months.

The drop in cryptocurrency prices is also highlighted by uncertainty in the U.S. Congress over cryptocurrency legislation, as well as the regulator's ongoing litigation with the crypto space. A court case involving the SEC and Coinbase over whether cryptocurrencies are securities remains unresolved.

Bitcoin price forecast

The bears were able to push the price below the $41,450 level. A new weekly low was formed near $40,601. At the time of writing, the asset was trading at $41,333, near the resistance level of $41,625.

Source and Copyright © TradingView

The key resistance level is at $42,100. If the bulls manage to take the upside over the bears, it may send the price to the resistance level of $43,250. A close above $43,500 would continue the uptrend. On the negative side, if the Bitcoin price fails to overcome $42,100, it will direct the asset towards the support levels of $40,750, $40,500 and $40,000.

This is not a 100 percent statement. The cryptocurrency market is very volatile and unpredictable. Do your own research.


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The materials found on the Cryptonica website shall not be taken as individual investment recommendations. The financial instruments or operations mentioned therein may not align with your investment profile or objectives. We assume no responsibility for any missing facts or inaccurate information in the texts. Cryptocurrencies are financial assets with high risk and volatility. Therefore, it is crucial that you conduct your own research on financial instruments and make independent decisions. Before engaging in any actions related to cryptocurrency, you shall study, understand, and comply with the laws applicable in your region and country.


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