Bitcoin Falls Below US$80,000 as Selling Pressure from Spot ETFs and Disappointing Trump Promises Weigh

The token had traded in a narrow range near US$95,000 for most of the month before this week, after reaching a record of about US$109,000 on Jan. 20.

The price of Bitcoin has slid in recent days, sliding from its record high reached earlier this month to lows not seen since December 2021.

The token, which hit a peak of around $109,000 on January 20, had been trading in a narrow band near $95,000 for the majority of the month. But it slid to as low as $80,000 on Wednesday.

“We are observing a notable reversal of the post-election market dynamics that had initially been driven by expectations of a pro-business, pro-market administration following candidate Trump’s victory,” said Raphael Thuin, head of capital market strategies at Tikehau Capital SCA.

“The market is now struggling with broader weakness in the tech sector, which is impacting technology-related investments like Bitcoin. Trump’s crypto-related announcements have also disappointed some traders.”

There is risk that Bitcoin prices can go lower to the mid-$70,000 level, according to Paul Howard, senior director at market maker Wincent.

“What’s been driving this is the lack of positive executive-order news some pundits were expecting, and U.S. inflation numbers,” said Howard.

Recent data showed that the U.S. consumer price index rose in January, indicating that price pressures are sticky and may keep the Federal Reserve on a path of gradual interest rate increases.

Bitcoin has slid in recent days as funds pulled out of exchange-traded products (ETPs) that invest in the world’s largest cryptocurrency, highlighting a shift in investor sentiment.

About $165 million was withdrawn from six major Bitcoin ETPs and ETFs from January 23 to January 27, according to data from Capital Link New Markets.

However, to be sure, the recent exodus of funds from spot-Bitcoin ETPs represents only about three per cent of the total assets they hold. And some of the outflows likely stem from hedge funds unwinding a popular trading strategy called the basis trade, which exploits differences in prices between spot and futures markets.

Some have also used the ETFs to profit from the cryptocurrency’s volatility or offset a short position in derivatives.