Wednesday saw more declines in Bitcoin, with the price momentarily falling below $61,000. This was part of a sell-off that started after the cryptocurrency achieved an all-time high last week.

According to CoinDesk data, bitcoin had recovered to trade at just over $62,900 at 03:38 a.m. ET, down around 2.5% from the previous day.

With a 124% increase in the last year, Bitcoin has had an incredible run. The largest cryptocurrency in the world reached a record high of slightly under $73,800 last week.

The spot bitcoin exchange-traded funds that were introduced in the United States in January and the impending halving, which is a scheduled event incorporated into the bitcoin code that essentially slows the supply of the digital currency onto the market, have both contributed to the price of the cryptocurrency. Halving has historically helped to maintain pricing.

According to data from Coinmarketcap, the total worth of all digital coins has decreased from bitcoin’s peak and was down $210 billion as of Wednesday morning.

Since the peak of the bitcoin market, the worth of all cryptocurrencies has decreased by around $400 billion, as the value of other digital assets like ether and solana has also dropped precipitously.

Most likely, profit-taking after a strong surge in cryptocurrency prices is contributing to the fall.

On March 12, there was a sharp increase of short-term holders selling their bitcoin for a profit, according to data from CryptoQuant.

“We’ve seen 20-30% pullbacks in previous Bitcoin bull markets as a normal occurrence when things start heating up. And we definitely had many signs over the past week of things heating up quite a bit,” Vijay Ayyar, vice president of international markets and growth at crypto exchange CoinDCX, said.

The bitcoin ETFs, which saw net withdrawals of $154.4 million on Monday, according to BitMEX Research, have gained some traction. Since March 1, it was the first time the ETFs had net outflows.

BitMEX Research reports that the Grayscale Bitcoin Trust, or GBTC, saw withdrawals of $642.5 million, but the inflows into the other ETFs were either negligible or unchanged.

GBTC has faced criticism due to its fees, which are higher than usual. Michael Sonnenshein, the CEO of Grayscale, stated to CNBC earlier this week that the cryptocurrency fund management plans to reduce costs on its Grayscale Bitcoin Trust ETF in the upcoming months.

According to Ayyar, bitcoin might weaken much further and test the $50,000–$52,000 mark, “which would be our line in the sand for this bull market to sustain going forward,” if it were to drop below the $60,000 barrier.

(Adapted from Reuters.com)

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