At a seven-week low, Bitcoin fall was seen on Monday, hovering below $40,000 for the first time since the launch of 11 spot bitcoin exchange-traded funds on January 11. Bitcoin extended its losses on Monday, dipping below $40,000 for the first time this year and pulling the rest of the crypto market down with it.
The world’s largest cryptocurrency bitcoin price last fall was 3.98% at $39,938.00, trading at its lowest since December 4 after a brief recovery. Ether, the second largest crypto price drop was of 6.37% at $2,328.30.
Bitcoin price falls
Bitcoin is still in its correction phase following the launch of several spot bitcoin exchange-traded funds in the U.S. for the first time ever. In the months leading up to the U.S. Securities and Exchange Commission giving the green light to begin trading, investors bought bitcoin in anticipation of the approval.
The Bitcoin rally was seen on growing excitement that the U.S. SEC would approve bitcoin ETFs, opening up the cryptocurrency to a slew of new investors. Bitcoin gained around 70% from August, when a federal court forced the SEC to review its decision to reject Grayscale Investment’s bitcoin ETF application.
Competing with traditional stocks
Some analysts said they had expected bitcoin bitcoin price to fall to pare some of those gains.
Other market-watchers said on Monday the cryptocurrency was having trouble competing with traditional stocks after the S&P 500 benchmark index notched fresh record highs on Monday driven by semiconductor and other tech stocks.
“It feels like bitcoin investors are running up a descending escalator right now as traditional financial benchmarks enjoy the easier ride to record highs,” said Antoni Trenchev, co-founder of crypto lender Nexo as Bitcoin price falls.
He noted previous major crypto events, including the initial public offering of crypto exchange Coinbase and the launch of bitcoin futures, were followed by similar bitcoin price fall.
Grayscale Investment conversion to EFT
Trenchev said bitcoin was also pressured by outflows from Grayscale Investment’s bitcoin trust, which was converted into an ETF when the SEC approved the other bitcoin ETF products earlier this month.
“Today’s bitcoin move is wholly expected,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. “It looks like a ‘sell-the-news’ pullback, before we see the cryptocurrency recapturing its bullish trajectory.”
Expect Bitcoin price to fall further
CoinDesk reported on Monday that FTX, which entered bankruptcy in 2022, has sold 22 million shares worth close to $1 billion in the ETF.
“Spot bitcoin ETFs are in danger of joining the … crypto hall of infamy,” Trenchev said.
Bitcoin has fallen 14% since January 10, the day the SEC gave its approval. Ether, which has been outperforming bitcoin, is still up 3% during the same period.
Charts analysts have warned that although its long-term uptrend remains intact, it likely still has further to fall. On Monday morning, as per Fairlead Strategies’ Katie Stockton, bitcoin could fall to as low as $36,000, adding that it wouldn’t be there for long. Wolfe’s Rob Ginsberg said it could be just the beginning of a disappointing first quarter of the year.
Other crypto declines
Cryptocurrencies broadly saw big declines Monday. Solana’s sol token lost 7%, while Ripple’s XRP fell 4% and the token tied to the DeFi protocol Uniswap dropped 5%.
