The price of Bitcoin crashed by $10,000 after testing the all-time high once again.
BTCUSD – Daily Chart
Bitcoin traded near the $69,250 level and was smacked down to $57,750. That highlights the speculative aspect and thin market. The move from $51,000 has been a blowoff, and traders should be cautious on the long side.
“The demand for these ETFs far exceeded anyone’s expectations,” Bitwise Asset Management CEO Matt Hougan said. The company was among those that launched a BTC ETF after SEC approval, which has sparked an investment frenzy. Some money managers are now predicting the digital token could rise above $100,000 before the end of 2024.
Investors are also bidding up the broader market, with Ethereum outperforming BTC by 7% since the year began. The new funds for trading BTC on share markets were launched in January and have seen inflows of around $8 billion. The funds are physically backed and, therefore, need to buy more coins as the price rises.
According to analysts last week, the new ETFs have been buying up a daily average of 3,320-4,300 coins since the beginning of February. That is a huge amount compared to the 900 coins per day being mined. More supply problems are expected for bitcoin this year, with the following “halving” scheduled to take place in around 50 days.
That event is when the reward for mining a new coin is cut in half, another measure that will slow supply in years to come.
However, the liquidity in the market was shown to be weak after the token was slammed lower by around $10-12k in the day’s trading session. That indicates that there is a lack of buy orders below, and many traders will have been liquidated on longs in the spot market.
