Bitcoin Hovers Near $42K As ETF Hype Fades
By Laxmikant Khanvilkar
Virtual digital assets (VDA) maximalist must be disappointed the way markets reacted last week. The listing of spot bitcoin (BTC) exchange traded funds (ETFs) was used by traders to dump the largest cryptocurrency by market capitalisation. It failed to break $50K mark. Instead, it has come off two years high and is currently sitting at $42,205 down 1.2% in the last 24-hours.
As the euphoria over the bitcoin ETFs approved last week gave way to a massive rout, it proved many market pundits who had rightly called for “sell the news”.
The liquidation pressure is felt across the broader market as well. Ethereum (ETH), the second largest cryptocurrency, is struggling to hold $2,500 level. It was recently changing hands at $2,493.6, losing 2.8%.
Last Wednesday, the U.S. securities watchdog made history by begrudgingly approving a batch of bitcoin spot ETF. The milestone decision resulted in commencement of trading in 11 ETFs – the traditional financial vehicles that may give retail and institutional investors alike easier exposure to bitcoin’s price. Analysts pointed out that similar events such as Coinbase’s stock market listing in April 2021 and ProShares’ futures-based bitcoin ETF (BITO) debut happened near a significant peak in crypto prices, possibly foreshadowing cooling prices ahead.
Bitcoin gaining nearly 80% since October 2023, without significant pullbacks, made an ideal case for liquidation post ETF approval.
Broader markets followed the suit. Large-cap tokens such as Avalanche, Dogecoin, Tron, etc are trending lower.
Hence, the global crypto market cap decreased 1.7% to $1.66 trillion in the last 24 hours. Simultaneously, the total crypto market volume fell 8.2% to $49.2 billion. Total volume in DeFi is currently $5.1 billion, and all stablecoins are $42.8 billion, representing 10.3% and 87%, respectively, of the total crypto market 24-hour volume. Bitcoin’s dominance is currently 49.8%, up 0.1% over the day.
The IC15 index, the barometer of the top fifteen tokens, eased 1.4% to 55,385.
Meanwhile, shares of Coinbase, the crypto exchange that provides vital custody services to most of the ETF issuers, lost 7.4% on Friday. Bitcoin miners Marathon Digital, Hut 8 and Riot Platforms all sank at least 10%; Marathon fared worst, slumping 15%.
As far as BTC is concerned, the analysts say, current levels offer a significant support. It can bounce back from here. If this support level falters, the next key zone to watch is at $40,000.
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