Crypto Market Crash Following Approval of Bitcoin ETFs in the U.S.

Crypto Market Crash Following Approval of Bitcoin ETFs in the U.S.

In a surprising turn of events on Tuesday, the crypto market crash intensified below key levels, deepening recent declines as selling continued following the regulatory approval of Bitcoin spot exchange-traded funds (ETFs) in the United States. This approval triggered intense activity in cryptocurrency markets, ultimately leading to the Crypto Market Crash.

Bitcoin Falls 4% in 24 Hours, Breaking $40,000 Barrier

Within the last 24 hours, Bitcoin’s price has plummeted by 4%, dipping below $38,900 and surpassing the psychologically important level of $40,000. The leading cryptocurrency has now suffered a nearly 20% loss since its recent peak above $48,000, a level reached amidst the trading frenzy surrounding the approval of Bitcoin spot ETFs.

“Bitcoin’s recent 4% drop below $38,900, after hitting $48,000, signals market volatility amid ETF approval hype,” acording to Camreo Global.

Market Analysis by Yuya Hasegawa from Bitbank

Yuya Hasegawa, an analyst at the cryptocurrency exchange Bitbank, shared insights on the present market conditions. He commented, “The bearish market sentiment and technical outlook may pose increased pressure on Bitcoin in the upcoming days. Unless the price swiftly rebounds and closes above $40,000, the challenges could persist.” If that fails, the price could continue to fall, with the next support likely at $38,000.”

“Selling the News” After ETF Approval Leads to Crypto Market Crash

The recent approval of these ETFs by the Securities and Exchange Commission was the expected catalyst that led to a “selling the news” dynamic, despite the long-term bullish case these funds represent for digital assets. The introduction of 11 Bitcoin spot ETFs has prompted changes in capital movements within the cryptocurrency sphere. Some traders are reallocating their investments away from the Grayscale Bitcoin Trust. Additionally, there is evidence suggesting that certain investors are temporarily exiting the cryptocurrency market.

Contrast with Stock Market and Analysts’ Outlook

The contrast between the risk aversion in digital asset markets and the bullish sentiment in the stock market is noteworthy. The Dow Jones Industrial Average and the S&P 500 have recently achieved historic highs. However, analysts are now approaching the dynamics in the crypto market with caution. There is consideration of the potential for a deeper correction or the onset of a new period of stagnation. This situation bears resemblance to the calm trading that characterized the months leading up to the crypto market crash triggered by the turmoil related to ETFs.

Concerns about Bitcoin Price by Alex Kuptsikevich from FxPro

Alex Kuptsikevich, an analyst at the brokerage firm FxPro, expressed concerns, stating, “Having fallen below $39,000, the price of Bitcoin now risks going beyond the typical correction after the rally that began in September. Up to the $37,500 area, Bitcoin may find little support. But below that is a prolonged consolidation area, where the chances of another long struggle are high.”

Impact on Other Cryptocurrencies

Beyond Bitcoin, Ether, the second-largest cryptocurrency, lost 6%, reaching $2,220. Smaller cryptocurrencies or altcoins also showed weakness, with Cardano down 7% and Polygon falling 6%. Memecoins exhibited more of the same, with Dogecoin and Shiba Inu each losing 6%.

“Cryptocurrency market faces widespread decline; Ether drops 6% at $2,220, Cardano and Polygon follow suit, signaling market vulnerability,” to said Barron’s.

Call Now ButtonSales Support