Bitcoin fell below $40,000 for the first time since early December as market enthusiasm for the listing of a Bitcoin ETF faded. As of 2:42 pm New York time on Monday, Bitcoin fell 5.3% to $39,556. This is the lowest level since December 4. Smaller coins Ethereum and Solana fell 6.7% and 9.3% respectively.
After enduring a bull run last year that propelled Bitcoin up nearly 160%, the digital token has mostly been on a downward trajectory so far this year. The previous rally was largely due to expectations that the U.S. Securities and Exchange Commission (SEC) would approve a Bitcoin spot ETF. The SEC approved 11 companies’ Bitcoin ETF applications on January 10. Bitcoin began to give back some of its gains after the SEC announced its decision, driven by "sell the news" trades.
In sharp contrast, global stock markets rose on Monday. The Stoxx Europe index rose 0.7% and the Nasdaq 100 index rose 0.2%. The market remains optimistic about the resilience of the U.S. economy ahead of the release of fourth-quarter GDP data on Thursday.
“We are seeing weakness across all digital assets as inflows into new ETFs have so far failed to offset profit-taking by speculative traders on positions established prior to the announcement,” said Caroline Mauron, CEO of digital asset derivatives liquidity provider OrbitMarkets. “While $40,000 may be an important psychological level, we do not expect a move below this level to trigger a cascade of liquidations, with the next support level expected to be around $38,000.”