Bitcoin Dips Below $40K, Triggering Market-wide Crypto Drop

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Bitcoin slips below 40,000 dollars – Millions in long positions are wiped out

The week began for the crypto market on a bloody note, as the industry barometer Bitcoin [BTC] slipped below 40,000 dollars for the first time in nearly seven weeks.

Bloodbath in the Market

The king coin plunged to 39,536 dollars at 19:45 UTC on January 22, as AMBCrypto noted with data from CoinMarketCap. The price recovered to 40,063 dollars at the time of press, as some traders bought the dip. However, Bitcoin’s decline triggered a domino effect in the broader market, with the total market capitalization falling by 2.62% in the last 24 hours.

This crash caused a massive dent in the portfolios of futures traders. According to Coinglass, BTC positions worth 63 million dollars were liquidated in the last 24 hours, with 80% of them being longs. In total, liquidations worth 211 million dollars were observed in the entire market, with longs making up the majority of it.

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Outflows from Grayscale increase sell pressure

The catalyst for the bloodbath remains the fund inflow of Grayscale Bitcoin Trust, formerly Grayscale Bitcoin Trust (GBTC). According to AMBCrypto’s analysis of CryptoQuant’s data, 14,291 Bitcoins flowed out of the fund on January 22, which equates to 570 million dollars at current market prices. Since the launch of the ETF, Grayscale’s on-chain balance has dropped by 66,000 BTCs, most of which are being liquidated on the secondary market.

The current developments contrast with the positive expectations prior to the approval of the ETFs. While Bitcoin reached a high of 48,000 dollars on the day of the ETF approval, it has since plunged by 16%. The negativity began to reflect in the social volume of the top cryptos. According to data from Santiment, there were 35% fewer discussions about BTC and 21% fewer about ETH compared to the week before the ETFs were released for trading.

Revival of old Bitcoins

Amid these developments, an interesting behaviour came to light. Specifically, the CEO of CryptoQuant, Ki Young Ju, drew attention to the resurgence of old Bitcoins in recent days. This most likely happened because the shareholders of GBTC had access to their Bitcoins again after a long time and were throwing them off for profits.

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Last update: 19. February 2024

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