Bitcoin price dips below $42,000 as sell pressure mounts

The price of bitcoin has slipped lower over the past 24 hours, pulling back below the $42,000 mark as sell pressure increases. The world's largest cryptocurrency by market capitalization fell 3% over the past 24 hours to $41,998 at 1:00 p.m. ET, according to The Block data.

Bitcoin BTC -2.99% 's retracement follows a rise in factors contributing to sell pressure on the digital asset, particularly among the short-term holder cohort.

According to CryptoQuant data , more than 25,000 bitcoins have been transferred from cold wallets to exchanges in the last 24 hours. The movement contributes to the liquid supply of the asset, thereby influencing price dynamics.

Bitcoin's circulating supply in profit has moved closer to a yearly high of just over 90%, with the current measure according the The Block's Data Dashboard at 89.4%. Also, data from The Block shows an uptick in transaction activity among the short-term holder cohort, those who have held the digital asset for 90 days or less.

Bitcoin network transactions spike

Transactions on the bitcoin network, meanwhile, have reached an all-time high. According to data from The Block, the number of transactions on the bitcoin network reached an all-time high of 633,000. Daily trading volume on the bitcoin network now stands at over $28 billion.

This is a retracement from a mid-December yearly high of over $38 billion, but still almost twice the trading volume seen throughout November and October of this year.

The recent volatility in the bitcoin market has caused the liquidation of over $44 million in leveraged positions. According to data from Coinglass, the vast majority of these liquidations have been shorts, with over $38 million wiped out in the past 24 hours, compared to only around $6 million in long positions.

Approval of spot bitcoin ETFs

Year-to-date gains for bitcoin are currently above 155%. The digital asset's gains have been mostly fueled by optimism that the Securities Exchange Commission is getting ready to approve one or more of the spot bitcoin ETF applications that have been filed with the regulatory body. More than a dozen firms including BlackRock, WisdomTree and Valkyrie are waiting for the green light from the SEC.

Analysts anticipate spot bitcoin ETFs being approved in the first quarter of 2024. However, ETC Group Head of Research André Dragosch believes "the approvals will only lead to a short-term price spike at first."

"However, the capital entering bitcoin gradually, over time will double the price of the digital asset in 2024," Dragosch added.