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- 1 The leading cryptocurrency briefly fell below $41,000 which prompted a cascade effect across the market.
- 2 The second-largest cryptocurrency, Ethereum (ETH) also witnessed an abrupt decline.
Bitcoin experienced a sudden and significant drawdown on December 11, dropping 6.5% from $43,357 to a low of $40,659 in just 20 minutes. The leading cryptocurrency briefly fell below $41,000. It prompted a cascade effect across the market. At the time of reporting, Bitcoin has rebounded slightly, trading at $42,328.
In the meantime, the second-largest cryptocurrency, Ethereum (ETH), also witnessed an abrupt decline. The cryptocurrency fell over 8.9% in the same time frame. ETH’s price has since stabilized at $2,233, representing a 5.3% daily decrease.
Other major cryptocurrencies, including BNB, XRP, and Solana, followed suit and posted losses in response to the market downturn. The swift drop led to the liquidation of more than $270 million worth of long positions, and approximately $1.2 billion in open interest on BTC was wiped out, leaving it at around $17.9 billion.
Bitcoin saw the most significant single-day decline in the whole past month. Even after the dip, the cryptocurrency is still up by 12% in the monthly time frame. Despite the setback, BTC sits over 150% since the beginning of the year.
The broader crypt community expects approval of spot Bitcoin exchange-traded funds (ETFs) from the U.S. Securities and Exchange Commission (SEC). The high hopes are driving the upward trend.
If approved, these ETFs would provide significant exposure to the asset for institutional investors. Additionally, market optimism stems from the anticipation of the U.S. Federal Reserve’s approach towards the interest rate cuts in mid-2024.
The next round of inflation data and the final Federal Open Market Committee (FOMC) meeting will be under the watch of traders and investors. A widespread expectation targets improvements in core inflation and speculations that the Fed will maintain current interest rates.
The crypto market remains dynamic, influenced by regulatory developments, macroeconomic factors, and investor sentiment, showcasing the inherent volatility associated with digital assets.
Bitcoin’s Rally Fueled by Key Factors: Analysts
Bitcoin’s recent surge is attributed to four significant factors, according to analysts. Firstly, the upcoming bitcoin halving expected in April 2024, traditionally linked to price increases due to reduced coin supply, is already impacting the market. Analysts from Bitfinex highlight the influence on market dynamics, particularly among long-term holders experiencing the highest supply inactivity.
Secondly, the potential approval of spot bitcoin exchange-traded funds (ETFs) is anticipated to trigger a surge in institutional investment. Analysts emphasize the significant impact of institutional money, especially if ETFs become operational post-approval, creating a speculative window.
Moreover, El Salvador’s profitable Bitcoin venture adds to the positive market sentiment. The country’s success with Bitcoin is seen as a noteworthy development in the cryptocurrency landscape. Additionally, the prospect of a Federal Reserve rate cut in 2024 contributes to the overall optimistic outlook.
As traders strategically position themselves in response to these dynamic factors, the cryptocurrency market experiences a climate of anticipation and cautious optimism.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
