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Bitcoin bulls fail to hold the $42K mark – But why?

Bitcoin stabilizes as JP Morgan reports the end of GBTC profit-taking

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TL;DR

  • At press time, the price of Bitcoin (BTC)  sits at $41,488.52, reflecting a  market cap of $814 billion, which is a  47.39% crypto market dominance.
  • A user on X states that ‘Liquidity Dampens Volatility’ “that is precisely why #BITCOIN has been trading sideways with price pinned between $41.5k – $44k since Saturday.”
  • According to Eric Balchunas, Senior Bloomberg ETF analyst, net flows from Bitcoin ETFs have surpassed $1.2 billion. BTC ETF has also bypassed Silver to be the second-largest ETF option for trade in the USA.
  •  Grayscale has seen massive withdrawals due to its 1.5% charge

Recently, Bitcoin, the flagship crypto, experienced a noteworthy setback as the bulls struggled to maintain the crucial $42,000 mark. This abrupt shift in momentum has left investors and enthusiasts questioning the underlying factors contributing to this decline.

Bitcoin’s price movements are influenced by a myriad of factors, including market sentiment, regulatory developments, macroeconomic trends, and technological advancements. Understanding the intricacies of why the bulls failed to sustain the $42,000 mark requires a comprehensive analysis of these elements. Here we go!

Bitcoin in trouble

At press time, the price of Bitcoin (BTC) is $41,488.52, with a 24-hour trading volume of $21,718,974,282.60. This reflects a -2.33% price drop in the last 24 hours and a -10.50% price drop in the last 7 days. The Bitcoin Fear and Greed Index is at 63.

The global crypto market cap is $1.72 trillion today, down 2.21% in the last 24 hours and 71.7% from a year ago. As of today, BTC’s market cap is $814 billion, reflecting a 47.39% crypto market dominance. Meanwhile, stablecoins’ market cap is $135 billion, accounting for 7.89% of the total crypto market cap.

BTC remains below $43,000 this week, with even institutional purchases having no impact on markets. BTC has disappointed traders after plunging 15% in two days last week following the launch of the first US spot exchange-traded funds (ETFs).

While there has been no more decline, bulls have also failed to move BTC/USD back to the top of its broader trading range, which has a ceiling of $48,000.

However, while examining which barriers stand in the way, trading resource Material Indicators identified a major issue: excessive liquidity around the spot price.

Material Indicators published a heatmap of BTC/USDT order book liquidity on Binance, the largest global exchange, indicating a cloud of bid support between $42,000 and a spot at roughly $42,500.

According to the heatmap, since Bitcoin went below $44,000, strong sale interest has surfaced at both that price and $45,000.

Material Indicators stated that there were no obvious contenders for shaking up the market in the short term.

The crypto market after BTC ETF approvals

Spot Bitcoin ETF trading day 4 has been completed successfully, and the embryonic sector has seen significant flow, indicating a liquidity stratum among important issuers.

According to Eric Balchunas, Senior Bloomberg ETF analyst, net flows from Bitcoin ETFs have surpassed $1.2 billion, particularly since nine of the eleven ETF filers approved by the United States Securities and Exchange Commission (SEC) received nearly $914 million on January 18.

The profits achieved on this trading day were the most since the spot Bitcoin ETFs began trading last week.

The fourth trading day’s inflows for Bitcoin ETFs outpaced the $450 million outflow from Grayscale’s GBTC. In total, the “Newborn Nine” had traded $5.4 billion and received $3 billion during the last four trading days. BlackRock’s IBTC has already traded for over $1 billion. Fidelity’s FBTC is close behind in second place, with Bitwise BITB coming in third.

Unlike other ETF issuers that have witnessed big inflows, Grayscale has seen massive withdrawals due to its 1.5% charge. Many investors are dumping GBTC, endangering the fund’s years of dominance. In addition, the asset management firm has been changing its Bitcoin holdings, sparking market speculation. 

Grayscale’s dismal inflow-to-outflow ratio was unexpected for an ETF issuer that outperformed on the first trading day of Bitcoin ETFs. On that day, Grayscale dominated the market with almost $4 billion in trading volume, leaving the other Bitcoin ETF issuers with a fraction of the market. With the most recent data, BlackRock has taken the lead.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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