Bitcoin (BTC) experienced a sharp decline, falling below $42,000 on Friday, marking a nearly 10% drop. This sell-off came in the aftermath of Thursday’s excitement surrounding the approval of bitcoin ETFs, which had initially propelled Bitcoin to a high of $46,000, reaching a two-year peak of $49,000. However, the surge in prices was short-lived.
Coinbase (COIN), a major cryptocurrency exchange providing crucial custody services to many ETF issuers, saw its shares plummet by 7.4% on Friday. Bitcoin mining stocks, including Marathon Digital (MARA), Hut 8 (HUT), and Riot Platforms (RIOT), experienced declines of at least 10%, with Marathon being the most affected, suffering a 15% drop.
These market downturns followed the launch of spot bitcoin exchange-traded funds (ETFs), representing a significant milestone for the crypto industry. The sell-off on Friday aligns with predictions made by research firm CryptoQuant, which anticipated a potential drop in Bitcoin’s price to as low as $32,000 after the ETF approval, considering it a “sell the news” event.
Historically, other pivotal events in the crypto market, such as Coinbase’s stock market listing in April 2021 and the debut of ProShares’ futures-based bitcoin ETF (BITO) in October 2021, coincided with notable peaks in cryptocurrency prices, hinting at a possible cooling period ahead.
As Bitcoin rallied by an impressive 80% since early October, reaching a two-year high, the latest decline raises questions about the sustainability of upward momentum. Swissblock analysts observed signs of the Bitcoin rally losing steam, particularly after reaching $49,000, with sellers becoming active above the $47,500 price level. The current dynamics suggest that Bitcoin’s recent performance has not met the expectations of some enthusiasts, emphasizing uncertainties about whether the market can maintain positive momentum.
