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Jan 19, 2024

Crypto Market Update: BTC Faces Downward Trend Following ETF Approvals

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In 2024, recent developments have left the Crypto market in a state of flux. The CoinSoMuch team is here to break down the latest trends and shed light on what's impacting the crypto landscape.

BTC's Roller Coaster Ride

Bitcoin (BTC), the pioneer in the cryptocurrency space, has been on a roller coaster ride lately. Since the SEC greenlit BTC-spot ETFs, the market has witnessed some unexpected turns. Just recently, BTC took a dip by 3.41%, closing at $41,333. What caught our attention is that this marks the first time BTC slipped below the $41,000 mark since December 18.

Analysts had anticipated a surge in BTC value after the SEC approved BTC-spot ETFs on January 11. However, despite the upcoming BTC halving event and expected increased demand, BTC's value dropped back to sub-$41,000. Bloomberg Intelligence ETF analyst, Eric Balchunas, shared insights into the trading volumes of BTC-spot ETFs, noting a 34% jump in volume. This is unusual post-launch behavior, suggesting intriguing market dynamics.

Market Influences at Play

The decline in BTC value seems to align with a stronger US dollar and shifting expectations regarding a March Federal Reserve rate cut. According to the CME FedWatch Tool, the probability of a March Fed rate cut fell from 70.2% to 51.9% within a week. This change in sentiment has implications for crypto investors, and it's something to keep a close eye on.

Investors eyeing a rapid evolution of the US crypto-spot ETF market received less-than-ideal news. The SEC officially delayed the decision on Fidelity's ETH-spot ETF application. Unlike BTC, the SEC views Ethereum (ETH) as a security, lowering the chances of a swift approval. Bloomberg Intelligence ETF analyst James Seyffart emphasizes that the May 2024 deadlines hold more significance for the crypto-spot ETF space.

Fear & Greed Index Signals Caution

The Bitcoin Fear & Greed Index, a popular indicator of market sentiment, took a dip from 63 to 51, slipping from the Greed zone into the Neutral zone. This downward trend suggests potential further losses for BTC before a potential recovery. It's a cautionary signal for investors to navigate the market with care.

Technical Analysis Insights

Looking at the technical side, BTC sits below the 50-day Exponential Moving Average (EMA) while holding above the 200-day EMA. This sends mixed signals, with a bearish near-term outlook but a bullish longer-term perspective. Breaking above the 50-day EMA could pave the way for a move to the $42,968 resistance level, but a fall below $41,000 may test the $39,861 support level.

On the other hand, Ethereum (ETH) seems to be holding a more positive stance. Sitting comfortably above the 50-day and 200-day EMAs, ETH sends bullish signals. A breakout from the $2,500 handle could propel ETH toward the $2,650 resistance level. However, investors need to remain cautious as a fall through the $2,457 support level could bring the 50-day EMA and $2,300 support level into view.

Looking Ahead: What to Watch

As we look ahead, the CoinSoMuch team advises investors to keep a keen eye on BTC-spot ETF-related news and SEC activity, particularly on Fridays. These factors continue to play a crucial role in shaping market dynamics. Additionally, a fall through the $41,000 handle for BTC could signal a potential test at the $39,861 support level.

In conclusion, the cryptocurrency market is navigating through a series of shifts and uncertainties. While BTC faces challenges, ETH holds its ground, and market participants need to stay vigilant. The CoinSoMuch team remains committed to providing timely updates and insights to help our readers navigate the ever-evolving world of cryptocurrencies.

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