Bitcoin falls below key $40k threshold amid continued sell off

Jan. 22, 2024

By Assad Jafri

Bitcoin has plunged below the critical threshold of $40,000, marking a significant downturn in the cryptocurrency’s value.

Bitcoin was trading at $39,640 as of press time, down 18% from its peak of $49,000 earlier in January.

The decline to around $40,000, Bitcoin’s lowest level since mid-December of the previous year, has been driven by a sustained sell-off amid a series of macroeconomic and market-specific factors.

Dollar headwinds

A key contributor to Bitcoin’s recent woes is the unexpectedly robust U.S. economic data, which has led to a tempered outlook for rate cuts by the Federal Reserve.

This situation has bolstered the U.S. bond yields and the U.S. Dollar Index (DXY), creating substantial headwinds for cryptocurrencies at large.

The U.S. interest rate futures market is still pricing in a near 50% chance of a 25-basis point rate cut in March, despite recent data and Federal Reserve policymakers suggesting otherwise. This dynamic poses potential macroeconomic challenges for Bitcoin.

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