Bitcoin
and other cryptocurrencies fell on Wednesday. The crypto sector gave up gains after a strong rally earlier in the year, but some analysts see reasons for the continued strength.
Bitcoin
is down 6.8% to $42,445 in the last 24 hours. The largest cryptocurrency fell back after breaking $45,000 on Tuesday for the first time in more than a year.
The main catalyst for Bitcoin remains the possible approval of exchange-traded funds tied to the cryptocurrency's spot price, which are expected to launch as early as next week. Several potential issuers of the ETFs have recently detailed their proposed fees for the funds.
However, doubts about ETF approval could contribute to Bitcoin’s crash.
A report from Matrixport, a crypto financial services platform, predicted on Wednesday that the Securities and Exchange Commission would reject all ETF applications in January. Matrixport research director Markus Thielen wrote in the report that an SEC denial could temporarily push Bitcoin prices back to $36,000 to $38,000, although he still expects the cryptocurrency to rise overall in 2024.
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If the Bitcoin ETFs are indeed approved, Bitcoin prices are likely to fluctuate around the expected date of that approval. Analysts at JP Morgan predict that even if approval is granted, it could be a sell-the-news moment.
However, other analysts are more confident about Bitcoin's recovery.
“We believe the fundamental backdrop for Bitcoin is currently…solid, driven by broad-based accumulation by long-term investors, slower supply growth from Bitcoin miners, and a very high probability that the long-discussed, physically-backed U.S. “The funds will ultimately be approved,” wrote Carsten Menke, head of next generation research at Julius Baer, in a research note.
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Meanwhile, according to MarketWatch, analysts at AllianceBernstein wrote in a research note that Bitcoin could potentially end the year at around $80,000, citing possible ETF approval, the so-called halving event expected in April and growing demand from companies.
Ether,
the second largest cryptocurrency, fell 8.1% to $2,207. Among the smaller cryptocurrencies
Solana
fell by 14% and
Cardano
fell by 12%.
Dogecoin
had fallen by 10%.
Write to Adam Clark at [email protected]
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