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Bitcoin experienced a notable dip below the $40,000 mark on Monday, marking its lowest point this year and initiating a downturn for other cryptocurrencies.
At its lowest point, the price of bitcoin dropped to $39,414.80, representing a 3.9% decline, according to data from Coin Metrics. This descent follows a broader correction in the cryptocurrency market, primarily attributed to the recent approval and launch of several spot bitcoin exchange-traded funds (ETFs) in the United States. The anticipation and subsequent approval by the U.S. Securities and Exchange Commission (SEC) prompted investors to buy bitcoin in the lead-up to the event.
Sylvia Jablonski, CEO and Chief Investment Officer at Defiance ETFs, commented on the market movement, stating, “Today’s bitcoin move is wholly expected. It looks like a ‘sell-the-news’ pullback before we see the cryptocurrency recapturing its bullish trajectory.”
Since the SEC’s approval on January 10, Bitcoin has undergone a 14% decline, while Ether, which had been outperforming Bitcoin, remains up 3% during the same period.
Although analysts suggest that Bitcoin’s long-term uptrend is intact, they caution that further declines may be ahead. Katie Stockton from Fairlead Strategies warned that Bitcoin could potentially dip to around $36,000, but emphasized that such levels might not be sustained for an extended period. Rob Ginsberg from Wolfe also indicated that this downturn might be just the beginning of a challenging first quarter for the cryptocurrency market.
The broader cryptocurrency market mirrored Bitcoin’s decline, with significant drops observed in various tokens. Solana’s sol token registered a 7% loss, Ripple’s XRP fell by 4%, and the token associated with the decentralized finance (DeFi) protocol Uniswap dropped by 5%. As the market undergoes this correction, investors closely watch for signs of stabilization and potential future trajectories in the evolving landscape of digital assets.