By: Eliza Bennet
Bitcoin fell below the essential marker of $40,000, indicating a significant decline in the cryptocurrency's worth. Currently trading at $39,640, Bitcoin's value has dropped 18% from a high of $49,000 earlier this month, marking Bitcoin's lowest level since mid-December of last year.
The continuous sell-off is attributed to several macroeconomic and market-specific factors, one being robust U.S. economic data that resulted in a tempered outlook for rate cuts by the Federal Reserve. This has notably boosted the U.S. bond yields and the U.S. Dollar Index (DXY), resulting in substantial headwinds for all cryptos. Moreover, the Federal Reserve's reluctance to cut rates despite the futures market still weighing a near 50% chance for a 25-basis point rate cut in March presents potential macroeconomic challenges for Bitcoin.
Another significant factor contributing to Bitcoin's volatility is the approval of multiple Bitcoin ETFs, sparking significant capital inflows and also prompting a “sell-the-news” reaction. Despite this pressure, nine newly launched ETFs have already accumulated more Bitcoin than Grayscale has sold, hitting $4.1 billion in assets within six trading days. However, analysts believe that if Bitcoin goes under the major support at $40,000, it could significantly tumble.
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