- ETF Aftermath: The correction following Bitcoin’s ETF approval was an expected result of an overbought market driven by heightened expectations and resulting profit-taking.
- Short-Term Trading Impact: The “buy the rumor, sell the news” phenomenon triggered by the ETF approval affected short-term traders, causing a temporary surge in the value of Bitcoin and a subsequent decline.
- Macroeconomic Challenges: Bitcoin suffered from increasingly difficult macroeconomic conditions, including rising interest rates and a stronger dollar, which contributed to bearish sentiment in January.
Bitcoin’s spectacular 160% surge throughout 2023 captivated investors around the world, fueling a year-end rally fueled by ETF expectations. However, the first week of January saw a notable decline, prompting closer scrutiny of the factors contributing to the change.
historic #Bitcoin Prices today, January 26th:
2024 – $41,174
2023 – $23,016
2022 – $36,800
2021 – $32,502
2020 – $8,608
2019 – $3,571
2018 – $11,118
2017 – $916
2016 – $390
2015 – $269
2014 – $1,007
2013 – $18
2012 – $5.3
2011 – $0.40— Historical Bitcoin Price (@HistoryBTCPrice) January 26, 2024
Overbought market buzz after ETF approval
The cryptocurrency industry experienced unprecedented optimism following the D.C. Circuit Court of Appeals’ landmark ruling last August challenging the SEC’s decision to reject the proposed Bitcoin ETF in favor of Grayscale. The court ordered the SEC to seriously consider approving the ETF, which triggered a surge in Bitcoin’s value starting in October.
Each week, updates on progress between various ETF applicants and the SEC dominated the headlines, sending the price of Bitcoin rising from $25,811 on September 1 to $46,670 on January 10. This rapid rise, an 80% increase in just four months, has created an overbought market. . As the ‘buy on rumor, sell on news’ phenomenon occurred, price adjustments consistent with JP Morgan’s predictions became inevitable.
Also Read: Bitcoin ETF and Gold ETF: A Comprehensive Guide
Make profits through short-term trading
While some Bitcoin investors stick to long-term accumulation strategies and are optimistic about the cryptocurrency’s potential for global adoption, January saw profit-taking by short-term traders. Nexo co-founder Antoni Trenchev characterized the trend as a classic example of traders capitalizing on expectations of ETF approval and quickly cashing out once the excitement subsides.
The “buy on the rumor, sell on the news” sentiment led to a temporary surge in the price of Bitcoin and led to profit-taking by traders. These changes in market dynamics, noted in the Motley Fool report, further contributed to the January recession.
More difficult macro situation and bearish atmosphere
Bitcoin faced headwinds in January due to tricky macro conditions, particularly rising interest rates and a stronger dollar. Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors LLC, highlighted these macroeconomic factors that have contributed to Bitcoin’s recent struggles.
analyst Bitfinex It highlighted the prevailing bearish sentiment as the main driver of the January price decline. It identified potential support levels at $38,000 and $36,000 in the event of a sustained correction, suggesting Friday’s 5% rally could indicate a recovery is possible.
Disclaimer: The information presented in this article is for informational and educational purposes only and does not constitute financial advice. Readers are encouraged to do their own research and consult a financial professional before making any investment decisions.