Bitcoin Crashing Below $40,000
The recent drop in bitcoin's price to around $40,000 has been driven in part by outflows from the Grayscale Bitcoin Trust (GBTC) and liquidations at FTX. Up to $800 million was moved out of GBTC this week, the largest settlement seen between Grayscale and prime brokerages. Meanwhile, major institutions like BlackRock and Fidelity continue to accumulate bitcoin, now holding over $2.6 billion worth.
The market turbulence comes on the heels of last week's bitcoin ETF rejection in the US. However, some see this as a "sell the news" event that is creating a buying opportunity for long-term investors. Factors like slowing inflation and potential Fed rate cuts could benefit bitcoin going forward. Mainstream voices on Wall Street, like the Franklin Templeton CEO, are also increasingly acknowledging bitcoin's role for investors globally who want an "insurance policy" against asset seizure.
On the regulatory front, two federal judges have now declared that bitcoin itself is not a security. This likely bodes well for Coinbase in its legal battle against the SEC. Meanwhile politicians like Senator Warren continue to spread misinformation about crypto's role in evading sanctions versus the predominant use of fiat currencies for money laundering.
In terms of prices, bitcoin remains around 30% off its highs, presenting long-term buying opportunities. Other major layer 1 protocols like Solana and Avalanche are also 30-35% down from peaks. Sticking to a basket of top assets, avoiding leverage, and dollar cost averaging on dips are wise strategies during periods of volatility. The user base and infrastructure continues growing steadily, keeping the long-term adoption thesis intact.
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