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Why are cryptocurrencies falling today?
The global cryptocurrency market capitalization has lost $40 billion in the past 24 hours due to prolonged market turbulence across several assets, such as Bitcoin (Bitcoin) and Ethereum (ET) are falling by shocking margins.
This downward trend, which began on January 12 following the initial hype surrounding the approval of the Bitcoin ETF, has continued amid numerous selling by institutional and retail investors. This led to a series of sell-offs that escalated into panic across the market.
Bitcoin triggers a bloodbath across the market
As a result, market sentiment has declined significantly, according to data from Santiment. Santiment’s total social volume metric suggests that while social activity has increased over the past week, the crypto community has been primarily focused on buy and sell mentions.
Social Trends Data – January 23 | Source: Santimento
However, despite the downtrend, market participants are leaning towards the “buy the dip” trend, as “buy” terms increase to 2,431, taking up 3.61% of the total social volume. Additionally, mentions of “sale” rose to 1,230, accounting for 1.83% of social volume.
Yesterday the market suffered a considerable setback following Bitcoin’s collapse below the key support level of $40,000. The asset had defended the $40,000 level from the beginning of the year until January 22, when collapsed at $39,700.
Bitcoin reclaimed the $40,000 support almost immediately. However, a resurgence of bearish pressure has triggered a similar market decline, with the asset currently changing hands at $39,734. BTC fell by 3.7% in the last 24 hours.
BTC and ETH price – January 23 | Source: Santimento
BTC’s decline has affected the rest of the market, with ETH down 4.11% over the past 24 hours to $2,307 at the time of reporting. ETH posted a massive intraday loss of 5.11% yesterday as bears targeted the $2,300 support in an attempt to trigger further declines.
GBTC sales
This market bloodbath was exacerbated by massive selling by the Grayscale Bitcoin Trust (GBTC) soon after the ETF was approved. Interestingly, following the SEC’s approval of the ETF, Alameda, FTX’s sister company, recently obtained approval withdrawn his case against Grayscale.
However, data suggests that FTX also sold 22 million GBTC shares, compounding the bearish pressure on Bitcoin and the broader market. In addition to the FTX sell-off, institutional investors continued to sell their GBTC shares, causing further BTC sell-offs.
Grayscale recently transferred $1.3 billion to Coinbase, the custodian services provider for GBTC. In the midst of a $2 billion outflow from the ETF, a market analyst he underlined that the product’s high 1.5% fee and lack of a massive discount triggered an investor exodus.
Meanwhile, as the onslaught continues, CryptoQuant data confirms that net flows on exchanges have recently moved towards bullish terrain, with deposits on exchanges currently below the weekly average. This pattern implies that the sales campaign may slow down.