Bitcoin (BTC), the leading cryptocurrency, experienced a sharp decline of more than 7% on Monday, December 11, with its price plummeting to $40,887.81, according to Coinbase. This was a significant drop from the early December surge when BTC reached a high above $44,000, maintaining proximity to that level over the weekend. The decline extended to other major cryptocurrencies, with Ethereum (ETH) falling 7% to $2,202.92, Solana’s SOL token experiencing a 7% dip, and Ripple’s XRP dropping approximately 8%.
Related: Bitcoin Hits $44,000, Achieving Highest Value Since April 2022
Market-Wide Impact
In the aftermath of the early December surge, Coin Metrics reports that BTC and ETH are on track for their worst days since August 18 and March 9, respectively. The crypto market downturn did not spare crypto equities. Coinbase saw a 5% decrease, MicroStrategy lost 7%, and notable BTC miners like Riot Platforms and Marathon Digital witnessed double-digit declines of 11% and 12%, respectively.
Wall Street favourites CleanSpark and Iris Energy also suffered losses of nearly 15% and 14%, highlighting the widespread impact of the market correction.
This sudden market reversal comes after an early December surge of 12% for BTC in December. The advance was fuelled by growing expectations that the U.S. Securities and Exchange Commission (SEC) could greenlight the first spot BTC Exchange-Traded Fund (ETF) in early January. Galaxy Digital estimates the potential market size for a U.S. BTC ETF to be around $14 trillion in the first year post-launch, expanding to approximately $26 trillion in the second year.
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Market Analysts’ Perspective
Wolfe Research’s Rob Ginsberg remains optimistic despite the recent dip, noting that “Bitcoin continues to stay red hot” and drawing parallels to the fervour witnessed in the early months of 2021 when BTC reached its all-time high. October and November saw a remarkable 56% surge in price, indicating sustained momentum in BTC’s upward trend. Ginsberg anticipates that the cryptocurrency’s resilience will endure, referencing the early December surge as a potential continuation of the positive trajectory.
The sudden pullback triggered a surge in liquidations, with $146 million in long liquidations for BTC and $100 million for ETH over the past 22 hours, as reported by CoinGlass. Despite the setback, Ginsberg and other chart analysts believe there is still considerable momentum in the current BTC uptrend, just like before the early December surge. He emphasised that the cryptocurrency would need to experience a more substantial decline for them to reconsider the strength of the rally.
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Future Catalysts and Market Outlook
Looking ahead, the anticipation of a BTC ETF serves as the initial catalyst among several lined up for the cryptocurrency in the coming year. Investors eyeing a potential increase in BTC’s price after the BTC halving in spring 2024 remain hopeful, while others closely monitor the Federal Reserve’s moves, particularly during its final policy meeting of the year scheduled to begin Tuesday. Clues from the central bank regarding the likelihood of rate cuts in 2024 could further influence the cryptocurrency market’s direction in the months to come.
Final Words
As always, the crypto market experienced an episode of volatility marked by an early December surge in Bitcoin and the recent decline. The sentiment is that Bitcoin’s resilience and potentially positive triggers on the horizon may contribute to a recovery and continued upward trajectory in the long term. For now, investors and enthusiasts are advised to stay vigilant and navigate the unpredictable crypto landscape with caution.
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