Crypto Market Starts Correction After Bitcoin ETFs Fever
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 ETFs on #Bitcoin have a net inflow of $782 million over the first three days.— Michaël van de Poppe (@CryptoMichNL) January 17, 2024
That's more than 50% higher than ALL ETFs combined have done in 2023 in terms of volume.
People are bearish on #Bitcoin and have a negative outlook.
Don't be like that. Buy the dip and hold.
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.
SEC v. @Coinbase Update V (last)— MetaLawMan (@MetaLawMan) January 17, 2024
The long awaited hearing is over.
As expected, there was no ruling from the Judge.
There were no knockout blows delivered by either side and, frankly, not a lot of high points over the course of the 5 hour hearing.
The Judge was the star of…
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.
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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.