Cryptocurrency markets were trading down on Friday due to significant outflows from ETFs. Bluechip cryptocurrency BTC sank 3.2% to $41,381 in early Friday trading, while Ethereum slid 2.5% to $2,467.

The crypto market is seeing an unexpected downtrend as Bitcoin faces selling pressure due to significant withdrawals from Exchange Traded Products (ETPs) to new spot ETF providers.

Blackrock’s Bitcoin ETF accumulated $1 billion worth of BTC in just one week, indicating a significant outflow of Bitcoin to such regulated ETFs. We may expect the Bitcoin price to rise once this changeover has passed and investors have completed their profit booking.

Other big altcoins, including Solana and Avalanche, plummeted more than 6% each. Cardano, XRP, Dogecoin, Polkadot, Chainlink, Toncoin, Polygon, Internet Computer, and Shiba Inu all declined.

CoinSwitch Ventures’ Investments Lead stated, “BTC experienced’sell the news’ pressure due to investor activity surrounding spot ETF approvals, resulting in its lowest price in a month. We can expect considerable fluctuation in the BTC price for some time. However, ETF inflows and assets under management (AUM) remain solid.

DeFi’s total volume is currently $5.54 billion, accounting for 8.49% of the total cryptocurrency market’s 24-hour volume. The entire volume of stablecoins is now $59.51 billion, accounting for 91.23% of the total 24-hour volume on the crypto market.

Bitcoin, the world’s largest cryptocurrency, has seen its market capitalization drop to $812 billion in the last 24 hours. According to CoinMarketCap, Bitcoin now has a dominance of 49.67%. In the last 24 hours, BTC volume climbed by 32.55% to $26.9 billion.

BTC faces a serious difficulty in retaining its current support of $41,000. A break below this level may indicate a bearish feeling, however a successful hold might open the way for the continuation of a new higher high.

ETH remains above the 20 EMA D. To maintain a positive trajectory, ETH must remain above $2,400, as a slip below this level might signal a negative reversal.

Bitcoin commenced trading at $42,000 at the start of the week, but a surge in take-profit and sell orders caused broad market liquidation following its recent peak at $44,700. The market saw a tug-of-war between bulls and bears, with sell-offs on Tuesday and Wednesday forcing BTC to drop below $40,000 ahead of the US interest rate announcement.

Bitcoin quickly recovered to the US$43,000 level on Thursday as the Federal Reserve maintained stable rates and hinted at future rate reduction in the coming year. The US Financial Accounting Standards Board (FASB) added to the market boost by enacting new accounting rules requiring corporations including as MicroStrategy, Tesla, and Block to evaluate their cryptocurrency holdings at fair value. These guidelines, which go into effect in 2025, will allow corporations to monitor real-time swings in asset values.

BTC is currently consolidating at $42,000, representing a 36% decrease from its peak but a phenomenal 159% year-to-date gain. The key resistance levels are $43,200 and $43,500, with support at $41,200, reflecting an overall optimistic outlook. Ethereum, like BTC, exhibits comparable profit and loss trends. Despite being 52% lower than its all-time high, Ethereum is up 12% month to date and 91% year to date.

El Salvador obtained regulatory clearance for the world’s first Bitcoin bonds, highlighting the shifting environment of digital finance. This action underscores El Salvador’s commitment to incorporating Bitcoin into its economic infrastructure following the country’s decision to make Bitcoin legal tender in September 2021. The introduction of Bitcoin bonds indicates a growing acceptance of cryptocurrencies as genuine financial instruments, which might draw funds from people and institutions looking for portfolio diversification and exposure to Bitcoin’s upside. Other governments may pursue similar approaches as the crypto sector evolves, with legal frameworks defining the future of these financial assets. Investors should keep a careful eye on these developments for clues about the global convergence of traditional and digital finance.

A noteworthy event expected for the coming year is the Bitcoin halving in April 2024. This four-year event involves half miners’ earnings in order to regulate the introduction of new Bitcoins, contributing to Bitcoin’s deflationary character. Historical trends from 2012, 2016, and 2020 show that Bitcoin Halving precedes a price spike in the months leading up to the event and in the months following.

Another imminent step is the likely approval of spot Bitcoin Exchange-Traded Funds (ETFs). This regulatory milestone might have far-reaching consequences for the cryptocurrency sector, providing investors with direct and regulated access to Bitcoin. The approval of spot Bitcoin ETFs might be a watershed moment in the financial world, drawing a broader spectrum of investors and helping to cryptocurrencies’ mainstream acceptability.

Bitcoin rose back above $38,000 on Wednesday, fueled by hopes that the US Federal Reserve is getting closer to decreasing borrowing prices if inflation remains low.

The largest cryptocurrency by market capitalization surged up to 3.3% to $38,264 before paring the gains. On Friday, Bitcoin reached an 18-month high of $38,422. Lower interest rates, in general, boost investors’ appetite for risky assets like digital tokens.

“As interest rates begin to fall, investors will return to risk assets in search of higher returns,” said Michael Safai, a partner at quantitative trading firm Dexterity Capital. “This, coupled with the momentum that crypto has built in recent months with ETFs and putting FTX in the rear-view mirror, has traders feeling like the conditions for a new bull run are coming together.”

The current slowing of economic activity, according to Federal Reserve Governor Christopher Waller, may imply that the central bank’s policy is tight enough. He delivered the statements as part of planned remarks for an event at the American Enterprise Institute in Washington on Tuesday.

Bitcoin has risen more than 40% since the beginning of October on expectations that the US Securities and Exchange Commission will approve the first exchange-traded fund that invests directly in the digital commodity. Bitcoin is up over 130% this year after falling 64% in 2022.

The confidence has also boosted so-called crypto equities including Coinbase Global Inc., miner Marathon Digital Holdings Inc., and ETF proxy MicroStategy Inc. This year, the shares of all three companies have increased by more than 250%.