Why Is Crypto Crashing Today? – January 23
Crypto News – Bitcoin, the largest cryptocurrency in terms of market capitalization, has experienced a significant decline following its recent surge to a two-year high. This drop comes as traders assess the outcomes of the highly anticipated first day of trading for exchange-traded funds (ETFs) that track Bitcoin.
During Friday’s trading session, the price of Bitcoin fell by as much as 10%, reaching as low as $41,444. It’s worth noting that Bitcoin briefly surpassed the $49,000 mark for the first time since December 2021 shortly after nearly a dozen ETFs began trading on Thursday.
The losses continued into early Saturday trading, with Bitcoin down by 7.47% over the previous 24 hours, settling at $42,715.
One factor that may have contributed to Bitcoin’s decline, as suggested by Anthony Scaramucci, the founder of SkyBridge Capital, is the selling of shares in the Grayscale Bitcoin Trust. This activity coincided with the launch of Bitcoin ETFs and likely played a role in the downward pressure on Bitcoin’s price. On Friday, the share prices of all Bitcoin ETFs also saw declines, with GBTC, which has been in operation since 2013, experiencing a substantial $2.3 billion in trading volume on its first day, setting a record.
Scaramucci also pointed out that the FTX bankruptcy estate is actively selling assets in response to the heightened market activity surrounding the ETF announcements. This has led to significant selling pressure on Bitcoin.
Crypto analyst Ali has noted that Bitcoin faced resistance at the $48,000 level, as indicated by the upper boundary of a parallel channel on its price chart. If Bitcoin’s decline continues, it could potentially reach the lower boundary of this channel at $34,000 before rebounding and aiming for the upper boundary at $57,000.
Crypto trader Gareth Soloway believes that a critical support level for Bitcoin is currently in the range of $42,000 to $43,000. If this level holds, Bitcoin may have the opportunity to resume its upward trajectory. However, if it fails to maintain this support, a level around $38,000 could come into play.
Despite the recent price drop, many cryptocurrency enthusiasts remain optimistic about Bitcoin’s long-term prospects. They point to the approval of the first-ever U.S. spot Bitcoin exchange-traded fund by the Securities and Exchange Commission (SEC) as a potential catalyst that could drive Bitcoin’s price to reach $100,000 or even $250,000 by the end of the year.