Decoding Today's Cryptocurrency Market Dip: Why is it Falling?
- The Cryptocurrency Market Experiences Significant Correction
- The Plunge of Ethereum and Global Cryptocurrency Market Cap
- The Underlying Reasons behind the Cryptocurrency Market Correction
- Predictions of Further Price Drops
- Outflows and Lowered Expectations
- Potential Cushioning from BTC's Halving in April
The Cryptocurrency Market Experiences Significant Correction
In the wake of recent market fluctuations, the cryptocurrency market has undergone a notable correction. Bitcoin$42,260 -0.64% (BTC), the world's highest market-cap cryptocurrency, has observed a 4.4% drop within the past day and a fall of more than 9% and 10% in the weekly and monthly charts respectively. This has seen BTC's value slip beneath the $39k mark, a first since early December 2023.
The Plunge of Ethereum and Global Cryptocurrency Market Cap
Similarly, Ethereum$2,315 -2.42% (ETH) has seen its daily charts slide down by 6.8% and weekly charts by a worrying 12%. The global cryptocurrency market capitalization hasn't been exempt from this downturn, with a 4.8% decrease within the past day, leaving it standing currently at $1.6 trillion.
The Underlying Reasons behind the Cryptocurrency Market Correction
Analysts are attributing the current market correction to outflows from Grayscale's BTC fund, GBTC. A recent JPMorgan report suggests that these outflows could exert more pressure on Bitcoin price trends in the upcoming weeks. Highlighting the impact, the now-defunct cryptocurrency exchange, FTX$3.28 -5.38%, reportedly sold 22 million GBTC shares, adding to the selling pressure.
Predictions of Further Price Drops
Renowned cryptocurrency analyst Ali suggests that BTC's value could potentially plunge further to $32,700, a decrease of over 16% from its current figures. The ongoing market downtrend, which commenced on January 12, coincides with the Securities and Exchange Commission (SEC)'s approval of 11 spot BTC ETFs (Exchange-Traded Funds). This has spurred investors to shift their assets from older BTC products to the newly approved SEC BTC ETFs.
Outflows and Lowered Expectations
According to the latest fund flow report from CoinShares, Bitcoin saw outflows exceeding $24 million in the past week. Investors appear to be adjusting their expectations in light of the US Federal Reserve's refusal to cut interest rates. The lack of interest rate cuts on the horizon leads investors to rethink their investment strategies, especially regarding riskier assets like cryptocurrencies.
Potential Cushioning from BTC's Halving in April
Despite the ongoing market correction, the anticipated BTC halving event slated for April may provide some relief. This event might mitigate the effects of the current market scenario and possibly stimulate a recovery.
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