Bitcoin Tumbles, Erasing Earlier Rally Gains

Bitcoin experienced a significant drop on Wednesday, giving back all of its gains from the recent rally. According to Coin Metrics, the price of bitcoin fell by 6% to $42,159.37. Just a day earlier, it had reached its highest level since April 2022, peaking at $45,913.30.

This decline in bitcoin’s price coincided with Nasdaq’s worst day since October, prompting traders to withdraw from tech stocks that had led the market’s advance in 2023. As a result, stocks traded lower while bond yields rose.

Additionally, investors expressed concerns about the Securities and Exchange Commission (SEC) potentially delaying the approval of an exchange-traded fund (ETF) this year. Some had expected the regulatory agency to approve an ETF, but this uncertainty has contributed to market volatility. Zach Pandl, the director of research at Grayscale Investments, one of the firms seeking SEC approval for an ETF, remarked that the market is “jumpy” ahead of the awaited ETF decision.

In terms of performance, January has not been particularly favorable for bitcoin. According to CoinGlass, it has ended the month in the green only five times out of the last 11 years. However, bitcoin had witnessed a rally at the end of the previous year, with its price increasing by 12% in December. Overall, the cryptocurrency finished 2023 with an impressive 157% gain.

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