Bitcoin falls to its lowest point since December 12 before recovering as buyers maintain the $40,000 support level.

Bitcoin dropped to a low of $40,280 on Jan. 19, marking its lowest point since Dec. 12, 2023, before recovering to $41,979 after four hours of persistent selling pressure that liquidated the majority of long positions on major exchanges.

At the time of reporting, Bitcoin was trading at $41,609 after failing to surpass the $42,000 mark. In the meantime, long liquidations amounted to approximately $30 million, accounting for 85% of all liquidations during this timeframe, according to CoinGlass data.

Most significant cryptocurrencies experienced comparable price fluctuations and are currently trading in the negative for the day. Nonetheless, the recovery from a vital support level suggests resilience as investors continue to purchase at this critical price point.

Maintaining $40,000

Bitcoin has remained above the $40,000 level despite encountering considerable selling pressure over the past week following the approval of spot ETFs for the leading cryptocurrency on Jan. 10, which led to a “sell the news” scenario.

The ETFs initially drove the price up to $49,000 before investors began to take profits on short-term positions, resulting in a decline back to levels observed in mid-December.

Initial speculation attributed the downward pressure to Grayscale, which reportedly sold tens of thousands of its Bitcoin on the market. However, data indicates that the nine new ETFs — spearheaded by BlackRock and Fidelity — have acquired more Bitcoin than what GBTC sold.

According to available data, Grayscale has liquidated approximately 60,000 Bitcoin since the ETF commenced trading, while the “Newborn Nine” have accumulated around 72,000 BTC during the same timeframe. This suggests that the downward pressure is not linked to the ETFs, as the newer issuers appear to be actively supporting the $40,000 price level.

The nine recently launched spot Bitcoin ETFs are witnessing ongoing interest from investors. BlackRock and Fidelity’s ETF have already reached $1 billion in assets under management, which translates to over 25,000 BTC.

Whales realizing profits

Crypto Quant Head of Research Julio Moreno noted that the selling has primarily originated from short-term traders who entered positions specifically in anticipation of the ETF approval to “buy the rumor,” along with Bitcoin whales taking profits after a year of gains.

Meanwhile, the distinction between long-term and short-term Bitcoin investors is becoming increasingly pronounced, as highlighted by recent market trends, according to CryptoSlate research.

Long-term holders — typically those who have maintained Bitcoin for over 155 days, including whales — have been seen transferring their assets to exchanges to secure profits. This trend began around July 2023, when Bitcoin’s price experienced a notable decline from $30,000 to $26,000.

Specifically, on Jan. 17 and Jan. 18, these long-term investors moved an estimated 25,000 BTC, valued at around $1 billion, to exchanges, a decision interpreted as cashing in on their investments without incurring losses.

In contrast, short-term Bitcoin holders, those who have held their investments for less than 155 days, have exhibited a more volatile pattern. On Jan. 18, they transferred a significant quantity of Bitcoin, valued at $2.4 billion, to exchanges at a loss.

This reflects a heightened level of activity among these investors and reduced profits. Particularly, those who anticipated leveraging Bitcoin’s rise to $49,000 appear to have already realized their profits or are now facing losses.

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