Bitcoin Falls to $40,000, Lowest Level Since Bitcoin ETF Launch

Bitcoin fell to its lowest level in seven weeks on Monday, hovering below $40,000 for the first time since the launch of 11 Bitcoin spot exchange-traded funds on January 11.

The world’s largest cryptocurrency lost 3.98% to $39,938.00, trading at its lowest level since December 4 after a brief recovery. Ether, the second largest cryptocurrency, fell 6.37% to $2,328.30.

Bitcoin rallied amid growing enthusiasm that the U.S. Securities and Exchange Commission (SEC) would approve Bitcoin ETFs, opening the cryptocurrency to a large number of new investors. Bitcoin has gained about 70% from August when a federal court forced the SEC to revisit its decision to reject Grayscale Investment’s Bitcoin ETF application.

Some analysts have said they expect Bitcoin to initially pare some of these gains.

Other market watchers said Monday that the cryptocurrency was struggling to compete with traditional stocks after the benchmark S&P 500 index hit new record highs Monday, driven by semiconductors and other stocks technological.

“It feels like Bitcoin investors are currently climbing a downward ladder, while traditional financial indices are enjoying an easier ride to record highs,” said Antoni Trenchev, co-founder of crypto lender Nexo.

He noted that previous major crypto events, including crypto exchange Coinbase’s initial public offering and the launch of Bitcoin futures, were followed by similar falls in Bitcoin.

Trenchev said Bitcoin was also feeling pressure from outflows from Grayscale Investment’s Bitcoin Trust, which was converted to an ETF when the SEC approved the other Bitcoin ETF products earlier this month.

CoinDesk reported on Monday that FTX, which filed for bankruptcy in 2022, sold 22 million shares worth nearly $1 billion in the ETF.

“Spot Bitcoin ETFs are at risk of joining the…cryptocurrency hall of infamy,” Trenchev said.

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