Bitcoin extended its recent declines on Tuesday, falling further below $40,000 to its lowest level since the beginning of December.
The price of the cryptocurrency was last lower by 3% at $38,767.10, according to Coin Metrics, adding to its 4% loss from the previous day, when the coin briefly dipped below $40,000 for the first time this year but recovered soon after.
Bitcoin has tumbled 15% since spot bitcoin ETFs began trading in the U.S. on Jan. 11.
Some have pointed to short-term selling pressure from exits from the Grayscale Bitcoin Trust (GBTC), which has seen about $2 billion in outflows since Jan. 19 while BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund have each seen more than $1 billion in inflow.
“The outflow from GBTC should not matter that much as bitcoin’s inflow into other ETFs have offset the outflow by $1.2 billion so far,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “It seems that the seemingly large amount of daily outflows from GBTC is affecting the market in a psychological way.”
Investors have been waiting out this correction, which was expected by many as a “sell the news” phenomenon following the well-telegraphed approval of bitcoin ETFs. Expectations around the event had emerged last summer and had intensified since August, pushing the bitcoin price steadily higher.
Now, traders are sitting on high unrealized profits and analysts say bitcoin’s price has a long way to fall before reversing higher. In the near term, $36,000 is the support level to watch, chart analysts have said. Still, chart experts say a new all-time high for bitcoin is still in sight for this year.
The move in bitcoin continued to pull the rest of the crypto market lower. Ether, fell 5% to $2,205.77. Solana slid 7% along with the token tied to decentralized finance protocol Uniswap. Ripple’s XRP fell 5% and dogecoin lost 6%.
Crypto related equities were under pressure too in premarket trading. Microstrategy, which has long traded as a proxy for the bitcoin price, lost 3%, while the biggest miners, Marathon Digital and Riot Platforms, fell 3% and 4%, respectively. Coinbase was lower by 4%, in part due to a downgrade by JPMorgan, which cited concerns of crypto rally fizzle.