Bitcoin breaks below $40k as spot ETF hype wanes

investing.com:

Investing.com-- Bitcoin fell sharply to an over seven-week low while also breaking below key levels on Tuesday as an initial boost from the approval of several spot exchange-traded fund now appeared to be waning.

Bitcoin fell 4.3% to $39,867.0 by 19:54 ET (00:54 GMT).

The world’s largest cryptocurrency saw a strong melt-up over the past year amid speculation that the Securities and Exchange Commission (SEC) would approve ETFs that directly track the price of the token- a first for U.S. markets. The token peaked at a near two-year high earlier this month, just as the SEC approved the spot ETFs.

But bitcoin’s performance since the approval has been largely underwhelming, defying forecasts that the price would shoot up with the entrance of more institutional capital.

All the spot ETFs which were approved and listed earlier this month- including BlackRock's (NYSE:BLK) iShares Bitcoin Trust (NASDAQ:IBIT), ARK 21Shares Bitcoin (NYSE:ARKB) and WisdomTree Bitcoin (NYSE:BTCW), were trading down between 13% and 14% since their debut. The ETFs had marked a strong first day of trading, but have fallen almost consistently so far in their price performance and trading volumes.

Bitcoin was pressured by resilience in the dollar, amid growing expectations that the Federal Reserve will keep interest rates higher for longer. Traders were seen sharply cutting bets this week that the Fed will begin trimming rates by as soon as March 2024.

Bets on a March rate cut had also driven gains in bitcoin over the past two months. But the token, which offers no yield, usually sees a subdued performance in a high-rate environment.

While the SEC’s approval of the spot ETFs offered some regulatory credibility to the industry, SEC Chairman Gary Gensler