Bitcoin faced renewed selling pressure this past week, dropping below the psychologically important $39,000 level. After a brief recovery attempt, BTC remains stuck in a relatively narrow trading range as investors weigh mixed signals on both crypto-specific and macroeconomic fronts.
Why did BTC plunge?
A significant contributor to Bitcoin’s latest slide appears to be capital outflows from bitcoin-backed exchange-traded funds (ETFs). The Grayscale Bitcoin Trust, the world’s largest bitcoin fund, saw investors pull $640 million on Monday alone, bringing total outflows so far this year to $3.45 billion.
Industry observers like James Seyffart attribute the ETF exodus to dissipating hype from new product launches last year combined with eroded confidence in crypto markets amid recent scandals. With demand wavering, persistent selling pressure sinks BTC’s valuation.
Other analysts simply reiterate that Bitcoin remains exceptionally volatile. Jim Cramer succinctly noted, “Bitcoin is tough to own,” advice he offered over a year ago when bitcoin traded 60% higher than current levels.
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Zooming out beyond the past week reveals bitcoin’s overall downward trajectory is intact, despite some countertrend rallies. Over the last month, BTC has dropped nearly 11%.
What to expect for BTC going forward?
In summary, BTC faces no shortage of headwinds as bearish forces remain largely in control after last year’s bull market fizzled out. However, given crypto’s history of volatility, analysts caution against trying to time further downsides.
Until a decisive breakout above or below recent multi-month trading ranges occurs, BTC likely face an extended period of directionless, choppy price action.
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According to CoinGecko data, BTC is trading at $38,955 with a 4.4% drop in value over the last 24 hours.