Bitcoin prices fell to $38,600, their lowest since early December, driven by enthusiasm for the newly launched spot Bitcoin exchange-traded fund.
Meanwhile, the leading cryptocurrency by market capitalization is down 5.4% in the last 24 hours, down more than 9% on the weekly chart, and down more than 10% over the past month.
The decline was further accelerated by profit-taking after the U.S. Securities and Exchange Commission approved a spot Bitcoin ETF on January 10, leading to a “sell the news” reaction in the market.
Bitcoin’s Next Key Level
in Recent TweetsRenowned analyst Ali Chart noted the historical pattern of Bitcoin price movements, highlighting its significant correlation with Fibonacci retracement levels.
The Ali chart points out that Bitcoin has typically reached the 78.6% Fib before reverting to the 50% Fibonacci level, mirroring the behavior observed in the last two bullish cycles. Perhaps in the current scenario, Bitcoin appears to have once again reached the 78.6% Fibonacci retracement level, indicating a potential correction in the market.
If historical patterns hold true, the Ali chart suggests Bitcoin could fall to $32,700, in line with the 50% Fibonacci retracement level.
Reasons for market decline
The cryptocurrency market is currently experiencing a correction and one of the reasons could be the possible outflow of funds from Grayscale’s Bitcoin Trust (GBTC). A recent report from JPMorgan suggests that this could put further pressure on the Bitcoin price in the coming weeks.
To further complicate the situation, selling pressure intensified with cryptocurrency exchange FTX selling $1 billion worth of GBTC stock, as previously reported by Coinpedia News.
Moreover, investors do not expect the US Federal Reserve (Fed) to cut interest rates any time soon. With no signs of an interest rate cut imminent, investors may be cautious about putting money into riskier assets, including cryptocurrencies.
However, despite these challenges, the upcoming Bitcoin halving event in April is providing some silver linings, which could potentially provide some support to the current market scenario.