Why Is The Crypto Market Down Today?

The crypto market is seeing a broad pullback today after a few days of strong rallying. Bitcoin is down over 8% in the last 24 hours at the time of writing and is trading just above $42,000. Ethereum has fallen 3.7% and is hovering around $2,500. There are a few key factors contributing to this cooldown in prices.

First, traders may be taking profits following the excitement around the approval of Bitcoin exchange-traded funds (ETFs) on Wednesday night. The approvals fueled a surge across the crypto ecosystem, especially in Ethereum-based tokens. Now that the initial euphoria has passed, some traders are likely locking in gains from the jump.

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Second, on-chain analytics provide evidence that Bitcoin may have topped out for this cycle. As we explained in our previous article analyzing the Inter-exchange Flow Pulse (link), Bitcoin appears to have found resistance around $47,000-$48,000 based on exchange flows. This implies we could be due for a correction to establish new support.

Crypto analyst Crypto Rover, who has over 600k Twitter followers, has turned bearish in expecting such a pullback. As he explained: “Let me explain what I see and why I turned bearish yesterday. Now that the Spot #Bitcoin ETF hype is behind us, we can get back to the charts. Honestly, there is so much untapped liquidity around $40,000 that I think we will grab it. Also, momentum looks like it’s drying up, and I think $40,000-$42,000 will be the next big reaccumulation phase.”

His technical analysis suggests there is significant buy-side interest around the $40,000 level based on order book dynamics. With momentum fading in the rally, we may need to retest this area to fuel the next leg up.

Finally, historically Bitcoin has seen corrections in the few months leading up to its quadrennial halving event. The next halving is set for April 2024 – just over 3 months away now. This period has previously been an opportune time for long-term holders to take profits.

In summary, a combination of short-term profit-taking, overhead resistance on charts, and historical trends help explain the current crypto pullback. But with strong fundamentals still in place, this likely represents a healthy dip rather than a change in the long-term bull trend.

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Petar Jovanović
Petar Jovanović

As the Head of Content at Captainaltcoin, I bring years of experience in the crypto industry. With a strong belief in the potential of the web3 market since 2017, I'm passionate about sharing valuable insights and knowledge. Feel free to connect with me on LinkedIn and let's discuss the exciting world of cryptocurrencies and decentralized technologies!