Bitcoin
and other cryptocurrencies were falling Wednesday. The crypto sector was giving back gains after a sharp rally to start the year but some analysts see reasons for continued strength.
Bitcoin
has fallen 6.8% to $42,445 over the last 24 hours. The largest cryptocurrency was falling back after breaking through $45,000 for the first time in more than a year on Tuesday.
The main catalyst for Bitcoin remains the possible approval of exchange-traded funds tied to the cryptocurrency’s spot price, with launches expected as soon as next week. Multiple potential issuers of the ETFs have recently detailed their planned fees for the funds.
However, doubts over ETF approval could be contributing to Bitcoin’s fall.
A report from Matrixport, a crypto financial-services platform, predicted on Wednesday that the Securities and Exchange Commission would reject all ETF applications in January. Matrixport’s head of research, Markus Thielen, wrote in the report that a denial by the SEC could temporarily push Bitcoin prices back to $36,000-$38,000, although he still expected the cryptocurrency to rise overall in 2024.
If the Bitcoin ETFs do get approved, Bitcoin prices are likely to be volatile around the expected date for that approval. Analysts at J.P. Morgan have forecast that even if approval is given, it could be a “sell-the-news” moment.
However, other analysts are more confident in Bitcoin’s rally.
“We believe the fundamental backdrop for Bitcoin is … solid at the moment, reflecting broad-based accumulation by long-term investors, slowing supply growth from the Bitcoin miners, and a very high likelihood that the long-debated physically-backed US exchange traded funds will eventually be approved,” wrote Carsten Menke, head of Next Generation Research at Julius Baer, in a research note.
Meanwhile, analysts at AllianceBernstein wrote in a research note that Bitcoin could potentially end the year at around $80,000, according to MarketWatch, citing the potential ETF approval, the so-called halving event expected in April, and growing demand from companies.
Ethereum,
the second largest cryptocurrency, was down 8.1% at $2,207. Among smaller cryptocurrencies,
Solana
dropped 14% and
Cardano
fell 12%.
Dogecoin
was down 10%.
Write to Adam Clark at adam.clark@barrons.com
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