Market cautious sentiment intensifies, Bitcoin plummeted by 7.5% and approached the $40,000 mark.
Bitcoin plummeted 7.5% in a broader cryptocurrency sell-off, briefly approaching the $40,000 mark. Other smaller tokens also experienced declines. Global stock markets and US stock index futures were volatile, intensifying market caution. Bitcoin has been rising this year, with expectations that regulatory agencies will approve the first ETF for direct investment in the token, driving cryptocurrency investments. Market analysts say there will be buying support from bargain hunters in the range of $37,500 to $40,000. Bitcoin has risen over 150% so far this year, but its price is still below the record high point of over two years ago.
Zhitong App has learned that in the broader sell-off of cryptocurrencies, Bitcoin once again briefly but sharply fell to $40,000, with the cryptocurrency plummeting 7.5% at one point to $40,521 before partially recovering to $42,245, a 3.6% drop. In addition, smaller tokens such as Ethereum, Ripple, Polkadot, and Cardano also experienced declines. The largest top 100 digital asset index fell by about 4%, marking the largest drop since November 22nd.
It is understood that Bitcoin has been rising this year due to market expectations that regulatory agencies will approve the first ETF for direct investment in the token, thereby expanding the potential base of cryptocurrency investors. At the same time, expectations of a Fed rate cut in 2024 have also fueled the rise of Bitcoin and the overall virtual currency market.
Richard Galvin, co-founder of Sydney Digital Asset Capital Management, said, "Market leverage has increased significantly, and the current decline appears to be a deleveraging of the market rather than any fundamental news catalyst."
As of the European morning session, according to Coinglass data, approximately $312 million in cryptocurrency trading positions betting on price increases were liquidated, the highest amount since mid-September.
In addition, investors this week remain cautious about U.S. inflation data and the Fed's final policy meeting in 2023, both of which could test aggressive rate cut bets. As a result, global stock markets and U.S. stock index futures fluctuated on Monday, and the U.S. dollar index rose slightly, reflecting a cautious sentiment.
Tony Sycamore, market analyst at IG Australia, said, "It makes sense to see some profit-taking." He expects the range of $37,500 to $40,000 to be strongly supported by bottom-fishing buyers.
It is worth mentioning that Bitcoin has risen more than 150% so far this year, driving a broader recovery in digital asset prices from the crash of $1.5 trillion in 2022, but its price is still far below the record high of nearly $69,000 during the pandemic more than two years ago.