2 reasons for Bitcoin to fall to $40,000

Bitcoin has lost more than 5% of its value in the last 7 days and has experienced a drop of about 16% since the peak of $48,500 in January this year. The price is now worryingly close to the psychological support of $40,000, and speculations about a continuation of the downtrend and a market correction are at their peak. But what are the reasons behind the recent fall of Bitcoin and how long will this trend continue?

Publishing the news of approval of cash ETFs in the worst way

To Report Cryptopotato, after years of effort, rigor and waiting, applications to launch Bitcoin Cash ETFs have finally been approved by the US Securities and Exchange Commission; But this was not without problems, and in fact, the way this news was announced reduced its impact on the market.

A few days before the official announcement of the approval of cash ETFs, the X (former Twitter) account of the US Exchange Commission was hacked and fake news of the approval of requests by this organization was published in it. This action created a two-way price spiral and subsequently led to the liquidation of millions of dollars of trading positions in leveraged markets.

Further, after publishing the official announcement regarding cash ETFs, the US Securities and Exchange Commission removed it from its website for a while. The reason for the temporary removal of this announcement was its publication during the trading hours of the United States stock exchange. According to the plans of this organization, the notification in this regard was supposed to be done after the end of trading hours.

Despite all these obstacles and problems, the price of Bitcoin experienced a rapid increase the day after the announcement and reached a peak of $48,500.

The launch of Bitcoin Cash ETFs in the US is a prime example of an event where traders buy on a rumor and sell on a major news release. At the same time, it seems that the inflows into these funds have not been able to offset the selling pressure in the market and Bitcoin is following its downward trend and approaching the key level of $40,000.

Market overshooting

The digital currency market has generally seen a long uptrend over the past months, without significant price correction. The main reason for this growth was again the expectation of traders for the approval of Bitcoin cash ETFs in the US.

As can be seen from the chart above, the price of Bitcoin moved from the level of $26,000 in mid-October and reached $48,500 this month without a single serious correction. This movement shows the 86% growth of the price in this period of time.

The popular fear and greed index of digital currencies also showed the excessive peaking of the market for a long time, i.e. the state of greed or extreme greed, and it has recently entered the neutral zone.

When will the uptrend return?

Sellers have had the upper hand in the market for the past few weeks, and that’s why some investors expect Bitcoin buyers to regain strength.

Predicting Bitcoin price developments for the future is a difficult task. However, the halving event is an important issue to be aware of.

This April, the reward for extracting each block from the Bitcoin network will be halved, and as a result, the speed of supplying new units will decrease, which in itself is considered a bullish factor.

Bitcoin halving in the past has always been accompanied by long-term price increases, and most analysts agree that this will happen again in the current cycle.

Also read: Bitcoin price prediction after halving