Bitcoin plummets to $40,000, hits lowest point since ETF debut

Bitcoin, the world's premier cryptocurrency, faced a significant downturn on Monday, plunging to a seven-week low and hovering below the $40,000 mark.

This is based on a Reuters report.

This marked the lowest point since the launch of 11 spot bitcoin exchange-traded funds (ETFs) on January 11. As of the latest update, Bitcoin was down 3.98 per cent at $39,938.00, signalling a bearish trend following a brief recovery.

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Ether, the second-largest cryptocurrency, also experienced a decline of 6.37 per cent, reaching $2,328.30.

Bitcoin's recent rally, fuelled by optimism surrounding the potential approval of bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC), took a hit as it entered a period of decline. The cryptocurrency had surged approximately 70 per cent since August when a federal court compelled the SEC to re-evaluate its decision to reject Grayscale Investment's bitcoin ETF application.

Analysts anticipated a retracement of some gains, highlighting the inherent volatility of the cryptocurrency market.

Market analysts pointed to Bitcoin's struggle to compete with traditional stocks, particularly as the S&P 500 benchmark index achieved fresh record highs. Traditional financial benchmarks enjoying smoother rides to record peaks seemed to overshadow Bitcoin's performance.

Antoni Trenchev, co-founder of crypto lender Nexo, metaphorically described the situation, stating, "It feels like bitcoin investors are running up a descending escalator right now as traditional financial benchmarks enjoy the easier ride to record highs."

Trenchev noted that historical trends indicate similar slumps in Bitcoin's value following major crypto events, such as the initial public offering of Coinbase and the launch of bitcoin futures.

Additionally, Bitcoin faced pressure from outflows from Grayscale Investment's bitcoin trust, which converted into an ETF after the SEC approved other bitcoin ETF products earlier this month. FTX, which faced bankruptcy in 2022, reportedly sold 22 million shares worth close to $1 billion in the ETF, further contributing to Bitcoin's challenges. Trenchev expressed concerns, suggesting that spot bitcoin ETFs are at risk of joining the "crypto hall of infamy."

(With inputs from Reuters)