Tuesday, February 27, 2024

Crypto plunges in steep sell-off, raising concerns beyond a typical correction.

In a day, the cryptocurrency market dropped more than 5%, to $1.52 trillion. After a pause during the sell-off on Saturday and Sunday, bitcoin has been under pressure ever since the week began. Many cryptocurrencies have seen sell-offs because of the ongoing sell-off, which has caused losses that are more pronounced than those in Bitcoin.

Since the Bitcoin sell-off mostly takes place during the busiest trading hours on US exchanges, its very nature prompts people to search for an institutional trail. It’s certainly plausible that investor interest has shifted from the cryptocurrency market to equities or that capital movements brought about by the introduction of spot ETFs are to blame.

Now that the price of Bitcoin has dropped below $39k, there’s a chance it will continue to rise after the usual correction following the September spike. There may not be much support for Bitcoin up to the $37.5K region. Below it, however, is a zone of protracted consolidation where the likelihood of another protracted tug-of-war is considerable. A decline from current levels will force one to really contemplate a short-term or long-term pessimistic view of cryptocurrencies.

Mike Novogratz, CEO of Galaxy Digital, stated that the majority of investors who sell their positions in Grayscale’s GBTC will transfer their money to other Bitcoin ETFs, offsetting the present BTC weakness. Previously, a lot of experts linked the latest drop in bitcoin prices to selloffs of holdings in Grayscale’s GBTC ETF fund.

CoinShares reports that after four weeks of growth and record inflows since 2021, investments in cryptocurrency funds decreased by $21 million last week. Investments in funds that permit Bitcoin shorts increased by $13 million, while those in Bitcoin, Ethereum, and Solana saw declines of $25 million, $14 million, and $8.5 million, respectively.

Although the figures conceal extremely high trading volumes ($11.8 billion), which are seven times the average weekly trading volume in 2023—existing ETFs with greater expenses suffered in the US—last week’s outflows from cryptocurrency funds were insignificant. Investments in other ETFs were unable to counterbalance the $2.23 billion in withdrawals from Grayscale’s GBTC fund, according to CoinShares.

Because of the financial system’s declining liquidity, Bitcoin will drop below $40,000. The drop is expected to last until January 31, when the US Treasury will reveal its quarterly borrowing plan, according to Arthur Hayes, the former CEO of BitMEX. He purchased March put options with a $35K strike price in order to carry out the plan.

The creator of Colorways Ventures and The Consensus, Kiarash Hossainpour, predicted that a significant sell-off by major Bitcoin holders, including GBTC, Mt.Gox, Celsius, and FTX, would put significant pressure on the cryptocurrency in the first half of the year.

By the end of 2023, there will be 580 million cryptocurrency users worldwide, up 34% from 432 million, according to the platform Crypto.com. Bitcoin and Ethereum will lead the way in terms of growing usage. Owners of Ethereum increased by 39% (from 89 million to 124 million) and Bitcoin by 33% (from 222 million to 296 million).

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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