Bitcoin, the pioneer in the cryptocurrency space, has recently taken a downward plunge, testing the $41,000 mark. This downward trend is mirrored in the global crypto market cap, witnessing a 1.65% loss in the last 24 hours, settling at $1.62 trillion. Despite finding stability around $41,000 over the weekend, the market is currently caught in a seesaw battle between bullish and bearish forces, creating an air of uncertainty. Let’s delve into the reason Bitcoin price has plunged, and the possibility of further dropping below $34,00 this month.
Market Performance of Bitcoin Price
Bitcoin slipped below the $40,000 mark, marking levels not seen since early December. The largest digital asset experienced a 4.36% drop in the past 24 hours, trading at $39,056.54 contributing to an approximately 4.8% decrease in the global cryptocurrency market cap, valued at $1.64 trillion. One of the best crypto to buy, Bitcoin is ranked #1 on CoinMarketCap, with a live market capitalization of over $765 billion. The total circulating Bitcoin coins are 19,606,037, while the maximum supply is capped at 21,000,000 BTC coins.
Why is the Bitcoin Price Declining?
The market dynamics are influenced by the selling pressure from Grayscale Bitcoin Trust (GBTC). The decline of Bitcoin price was fueled by ongoing attention to outflows from Grayscale’s spot ETF. As the SEC approved 11 spot Bitcoin ETF products in the U.S., some GBTC investors switched to these new ETFs, resulting in significant selling pressure.
Reports indicate that GBTC has offloaded over $2 billion worth of Bitcoin on Coinbase, while the defunct cryptocurrency exchange FTX liquidated nearly $1 billion of its GBTC holdings as part of its bankruptcy proceedings.
Is Bitcoin Price Going Down to $34K?
Analysts have drawn parallels between the current bitcoin price trend and a notable correction observed in January 2021. This historical context suggests that periodic drops are normal and often precede market rebounds. In January 2021, Bitcoin faced a 30% drop within a short period, only to quickly recover and surge to new highs. The possibility of a similar scenario unfolding in January 2024 raises the potential for an optimal buying opportunity if Bitcoin drops to the mid to low $30,000 range.
Additionally, Bitcoin’s recent false breakout from the $48,000 liquidity zone has left it in a technical stalemate. Positioned between the $43,000 and $40,000 range, Bitcoin faces a consolidation phase influenced by ETF-related selling. With the upcoming halving expected on April 7, 2024, historical patterns suggest a potential significant correction before positioning for a strong rally.
A financial analyst and trader, Seth, highlighted that bitcoin dropped below the 40K mark, causing significant losses for individual investors who bet on the price going up. The community is hoping that the support around this level remains strong, anticipating a daily closing price climb back above 40K.
Presently, the technical constraints lie at the resistance level of $43,118. The potential for a rise hinges on overcoming this resistance and maintaining stability at that level. While there is uncertainty in the short term, historical trends and technical indicators provide insights into the potential for a rebound and upward trajectory after a correction.
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