Bitcoin dropped below $ 40,000 on Tuesday as Amazon denied claims that it would accept the token for payments this year. To be more specific, it remained virtually unchanged at $ 37,532 as of 9:15 pm ET, while the competing Ether coin showed a slight decline.

A day earlier, the cryptocurrency rallied after Amazon posted a job vacancy on cryptography. But the momentum quickly fizzled out because a spokesman stepped out and denied that the token will be accepted for payment this year.

Investors rushing to cover bearish rates also helped propel Bitcoin to $ 40,545, the highest level since June 15. More than $ 950 million of crypto shorts were liquidated on Monday, the highest since May 19, according to Bybt.com.

Vijay Ayyar, head of Luno's Asia-Pacific business, said short positions piled up as Bitcoin's rate continues to move down. In addition, the strong fluctuations are part of a broader correction, which could provoke a strong jump towards $ 45,000.

However, many investors are concerned about tighter regulation from many countries, as well as growing criticism on Bitcoin's carbon footprint. They fear that the cryptocurrency will drop below $ 30,000 in the coming months.

Edward Moya, senior market analyst at Oanda, also said Bitcoin could decline sharply this week if the Fed announces a hawkish stance on monetary policy.