In an unexpected turn of events, Bitcoin’s value plummeted to $38,600, hitting its lowest point since early December. This decline follows the recent excitement surrounding the introduction of spot Bitcoin Exchange-traded funds (ETFs).
As excitement over the newly launched spot Bitcoin ETFs surged, the leading cryptocurrency experienced a 5.4% drop within the last 24 hours. Additionally, there was a notable 9% decline over the week and a substantial 10% drop over the past month.
Adding to the downward trend was the aftermath of the U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs on January 10. This approval triggered a classic “sell-the-news” reaction, as profit-taking activities intensified.
Insights from Ali Chart: What Do the Patterns Tell Us?
Renowned analyst Ali Chart examined Bitcoin’s historical price movements, noting a significant correlation with Fibonacci retracement levels. Drawing parallels with the past two bull cycles, Chart observed a consistent retracement to the 50% Fibonacci level after reaching the 78.6% Fib.
The current scenario suggests a potential correction, with Bitcoin possibly revisiting the 78.6% Fibonacci retracement level. If historical patterns hold, he predicts a dip to $32,700, aligning with the 50% Fibonacci retracement level.
Also Read: Bitcoin Price Tumbles 20% After ETF Hype: Is This a Good Time to Buy?
Why is the Market in Turmoil?
The ongoing correction in the cryptocurrency market is further complicated by outflows from Grayscale’s Bitcoin Trust (GBTC). A JPMorgan report predicts increased pressure on Bitcoin prices in the coming weeks. Adding to the turmoil, FTX, a prominent cryptocurrency exchange, offloaded a substantial $1 billion worth of GBTC shares, intensifying selling pressure.
Investor apprehension is compounded by the absence of expectations for a reduction in interest rates by the US Federal Reserve. In the absence of imminent signs of rate cuts, investors appear cautious about channeling funds into riskier assets, including cryptocurrencies.
…But There is Still Hope!
Despite these challenges, there’s a silver lining on the horizon with the upcoming Bitcoin halving event in April. This event could potentially offer support to the current market scenario, injecting optimism amid uncertainties.
Read More: Bitcoin Options ETFs Could See Approval in Just 27 Days
