Bitcoin has seen a brief but sharp decline towards $40,000 amid a broader cryptocurrency sell-off. The largest cryptocurrency once fell 7.5% to $40,521, and later recovered some of the losses. As of 13:05 Singapore time on Monday, it fell 3.7% to $42,165.
Smaller cryptocurrencies such as Ethereum, XRP, Polkadot and Cardano also fell. An index of the 100 largest digital assets fell about 4%, its biggest drop since Nov. 22.
Bitcoin has been rising this year amid expectations that the United States may allow the first spot Bitcoin exchange-traded fund (ETF), which may give Bitcoin a wider investor base. Betting that the Federal Reserve will cut interest rates in 2024 has also stimulated the rise of Bitcoin and the virtual currency circle.
Investors this week will focus on U.S. inflation data and the Federal Reserve's final policy meeting in 2023, both of which are likely to test aggressive bets on interest rate cuts.
Tony Sycamore, a market analyst at IGAustralia Pty, said some profit-taking was understandable, and he expected that Bitcoin's fall to the $37,500 to $40,000 range would be "strongly supported" by bargain-hunting buyers.