Bitcoin price went down to $38,600, the lowest since early December as enthusiasm over the newly launched spot Bitcoin Exchange-traded funds.
Meanwhile, the leading cryptocurrency by market capitalization has witnessed a 5.4% drop in the last 24 hours, a decrease of over 9% in the weekly charts, and a decline of more than 10% over the past month
The decline was further accelerated by profit-taking after the U.S. Securities and Exchange Commission approved spot Bitcoin ETFs on January 10, leading to a “sell-the-news” reaction in the market.
Bitcoin Next Key Level
In a recent tweet, prominent analyst Ali Chart drew attention to historical patterns in Bitcoin’s price movements, highlighting a significant correlation with Fibonacci retracement levels.
Reflecting on the behavior observed in the last two bull cycles, Ali Chart notes that Bitcoin typically retraced to the 50% Fibonacci level after reaching the 78.6% Fib. Perhaps, the current scenario sees Bitcoin once again hitting the 78.6% Fibonacci retracement level, indicating a potential correction in the market.
If historical patterns hold true, Ali Chart suggests that Bitcoin could experience a drop to $32,700, aligning with the 50% Fibonacci retracement level.
Reason For Market Drop
Currently, the cryptocurrency market is going through a correction one reason could be the outflows of money from Grayscale’s Bitcoin Trust (GBTC). A recent report by JPMorgan says that this could put more pressure on Bitcoin prices in the next few weeks.
To make things more complicated, a cryptocurrency exchange FTX sold $1 Billion worth of GBTC shares, making the selling pressure even stronger, as earlier reported by Coinpedia news.
On top of that, investors are not expecting the US Federal Reserve to lower interest rates anytime soon. With no imminent signs of interest rate reductions, investors might be cautious about directing funds into riskier assets, including cryptocurrencies.
However, amidst these challenges, there is a silver lining with the upcoming Bitcoin halving event in April, which could potentially provide some support to the current market scenario.