Bitcoin has fallen below $40,000, marking its lowest level in seven weeks amid a deepening crypto market correction. The 3% daily decline extends the BTC pullback to 18.5% from its January 10 peak of $48,500.
Analysts anticipate the correction could persist, reaching a potential depth of 30%, ultimately bringing Bitcoin prices down to $34,000.
Market Dynamics Amid Grayscale Actions
On January 23, CoinGlass, an on-chain analytics platform, highlighted a notable bright spot on the liquidation heatmap at the $34,000 level. The platform reported $225 million in liquidations over the past 24 hours, primarily affecting long positions for Bitcoin and Ethereum. CoinGlass noted ongoing market impact from Grayscale’s actions, citing the continuous selling pressure. Despite the liquidations, more than 550,000 BTC remains in Grayscale’s Bitcoin Trust (GBTC).
#Bitcoin liquidation heatmap (3 month)
Heatmap brighter liquidity cluster at $34005.
Grayscale continues to dump the market.
Total Bitcoin in Trust 552.68K
1d Change -14.29K
7d Change -39.42K👉https://t.co/Nu9kTJMzy2https://t.co/Blt2gsNRBx pic.twitter.com/pj2MvBGKo2
— CoinGlass (@coinglass_com) January 23, 2024
CC15Capital reported a net purchase of 27,717 BTC by fund issuers since the launch of spot ETFs. This amounts to approximately $1.1 billion at current prices, indicating continued interest despite outflows from GBTC. Tether and VanEck strategist Gabor Gurbacs emphasized the positive impact of Bitcoin ETFs, stating that they absorbed the FTX GBTC estate sale efficiently, transforming estate sales from catastrophes to manageable events. He highlighted the shift of Bitcoin from weak hands to strong hands, attributing it to the influence of ETFs.
UPDATE
GBTC just announced 15K #BTC outflows.Down to 552K #BTC holdings.
Total ETF flows have been negative last two trading days.
Follow our ETF Tracker for live updates. pic.twitter.com/og47IwSe9i
— Thomas | heyapollo.com (@thomas_fahrer) January 23, 2024
Monday was described as a “bloodbath” for most of the crypto sector, according to Santiment on January 23. The blockchain analytics provider noted a 35% reduction in discussions related to BTC and a 21% decrease for ETH compared to the week of ETF approval. Santiment observed the entrance of Fear, Uncertainty, and Doubt (FUD) into the picture, anticipating potential price bounce opportunities as FUD peaks. This suggests evolving market sentiment and opportunities emerging amid the current challenges.
Crypto Market Update: Decline in Total Market Cap
As of the latest update, the total market capitalization has experienced a 2.8% decline, settling at $1.65 trillion. This drop reflects the ongoing challenges in the cryptocurrency market.
Bitcoin has managed a slight recovery, surpassing $40,000. However, the short-term outlook suggests the potential for further challenges, indicating a complex market landscape.
Altcoins painted a concerning picture on Tuesday morning in Asia, with Solana (SOL), Avalanche (AVAX), Chainlink (LINK), and Litecoin (LTC) experiencing the most significant losses. This sea of red underscores the widespread impact on alternative cryptocurrencies amid the current market conditions.
Important:Â Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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