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With Bitcoin plunging below $40,000 lately, we have highlighted three major reasons behind this massive price decline.
The world’s largest cryptocurrency by market capitalization, Bitcoin (BTC), suffered a devastating collapse recently, plunging below $40,000 for the first time since December.
Bitcoin’s latest price plunge brought its market cap to around $774.82 billion. However, its 24-hour trading volume is up 100.3% to $29.5 billion, data from CoinMarketCap shows.
In the hours leading up to press time, Bitcoin was changing hands at $39,508, down 3.5% over the past 24 hours. It bears mentioning that yesterday’s dip was the largest since the SEC approved the trading of 11 spot Bitcoin ETFs on January 10.
The recent dip in Bitcoin has prompted market analysts and crypto stakeholders to ascertain the major reason behind the collapse. Shivam Thakral, the CEO of India-based crypto exchange BuyUcoin, asserted that Bitcoin is experiencing a “healthy pullback” after embarking on a remarkable run due to the ETF euphoria.
3 Potential Factors Behind Bitcoin Plunge
While this could be the case, other factors may have played a role in Bitcoin’s recent dip. In the wake of Bitcoin’s recent collapse, we’ve highlighted three major factors that could be responsible for the bearish price movement.
Grayscale’s Massive Bitcoin Movement to Coinbase
Recall that Grayscale was among the asset management companies that received the SEC’s blessings to launch Bitcoin exchange-traded funds. Since Grayscale received the approval, the asset manager has been moving huge volumes of BTC to its custodian, Coinbase Prime.
Yesterday, Grayscale moved a staggering 15,308 Bitcoins worth $604.78 million to the custodian. This brought Grayscale’s total outflow to Coinbase Prime to 63,991 BTC, worth $2.52 billion.
Grayscale deposited 15,308 $BTC($623.8M) to #CoinbasePrime again 50 mins ago.
Since the ETF was passed, #Grayscale has deposited 63,991 $BTC($2.68B) to #CoinbasePrime during the opening hours of U.S. stocks (14:30 UTC).
According to Arkham, #Grayscale currently holds 549,116… pic.twitter.com/i1LtKryu6W
— Lookonchain (@lookonchain) January 22, 2024
At the early phase of Grayscale’s Bitcoin transfer to Coinbase, many crypto enthusiasts speculated that the asset manager was planning to sell the BTC on the exchange. However, it appeared that Grayscale was only transferring the assets to the custodian arm of the exchange for safekeeping.
Crypto Naysayers Resume Bearish Sentiment
Crypto naysayers have resumed the act of sharing negative views about Bitcoin. Yesterday, famous crypto critic Peter Schiff took to X to predict doom for the recently approved 11 spot Bitcoin ETFs.
In a tweet yesterday, he revealed how ProShares Bitcoin Strategy ETF, a BTC futures ETF approved in 2021, has dipped over 50% from its opening trading price of $40. According to Schiff, the recently approved spot ETFs could suffer a worse fate than the ProShares Bitcoin Strategy fund.
The ProShares Bitcoin Strategy ETF, which tracks #Bitcoin futures, launched in Oct. 2021. $BITO began trading at $40.88. So far today's low was $19, down more than 50% in over two years. I think those who bought any of the 11 spot #BitcoinETFs will experience even worse results.
— Peter Schiff (@PeterSchiff) January 22, 2024
Similarly, CNBC’s Mad Money host Jim Cramer, who recently noted that Bitcoin is unlikely to find its footing, shared a cryptic post yesterday: “Bitcoin=Tough Down.”
Gox Inches Closer to Bitcoin Repayment
The massive collapse of Bitcoin price may have stemmed from updates about Mt. Gox preparing to commence Bitcoin and Bitcoin Cash (BCH) repayments.
According to reports, Mt. Gox recently sent confirmation emails to creditors, asking them to complete the identity verification for crypto exchange accounts to be used to repay BCH and BTC.
The move comes after the hacked exchange started bank repayments last month, with billions of Japanese yen deposited to creditors’ PayPal accounts.
Sources claim that the exchange could repay between 142,000 and 200,000 BTC to creditors within the next 60 days. Expectedly, the news stirred a negative reaction among crypto enthusiasts, as they feared that the potential 200,000 BTC release could have a bearish effect on the top asset.