BTC fell $3000 in one hour, is it a normal correction or the end of the bull market?

BTC Plummets $3000 in Just One Hour A Routine Adjustment or the Demise of the Bull Market?

Is this the last chance to catch the callback?

Original author: How to

OKX European easy market shows that this morning at 10 o’clock, the price of Bitcoin dropped more than $3,000 within an hour, with a lowest point of $40,200. After breaking through $40,000 on December 4th, Bitcoin fell below $41,000 for the first time. As of the time of writing, BTC has rebounded to $42,008, with a 24-hour decrease of 4.17%.

Market Review: Bitcoin briefly dropped to $40,200

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Due to market expectations for Bitcoin spot ETFs, combined with the easing of the Federal Reserve’s interest rate policy, Bitcoin experienced a significant increase last week, rising from a low of $39,428 to a high of $44,726.8, a maximum increase of 13.43%. However, at 10:12 am today Beijing time, the price of Bitcoin briefly dropped from $43,700 to $40,200, with a daily maximum decline of 7.7%, setting the largest single-day decline since the current upward trend.

In the previous 7 days, both Bitcoin and altcoins experienced significant increases, with the older public chains experiencing larger increases. However, after this morning’s drop, although the overall trend is still upward, there have been significant losses. In the past 7 days, ETH has only increased by 1.1%, with a current price of $2,237.58. The ETH/BTC exchange rate has rebounded, but is still at a low level, reaching a high of 0.05483 and currently reported at 0.05304.

In the previous 7 days, among the top ten tokens by market cap, only Solana (11.1%) and DOGE (14.1%) have exceeded BTC’s increase; among the top 50 tokens by market cap, AVAX (57.8%), DOT (20.9%), IMX (30.8%), INJ (28.3%), and EGLD (28.4) have all increased by more than 20%, while the remaining tokens have shown an overall upward trend.

Due to the overall market downturn, the current total market capitalization of cryptocurrencies has surpassed $1.641 trillion, with a 24-hour decrease of 3.3%; the enthusiasm of cryptocurrency users for trading is generally increasing, and today’s fear and greed index is 74 (last week’s average was 73), with a small change in the level of greed, indicating an overall greedy sentiment.

In terms of derivative trading, according to Coinglass data, there have been $389 million liquidations across the entire network in the past 24 hours, with BTC liquidations amounting to $95.466 million and ETH liquidations amounting to $80.731 million, making a total of 114,201 people victims of liquidation.

The total BTC contract position across the network is $19.181 billion, with a 2.2% decrease in the last 24 hours. Among them, CME ranks first with a contract position of $5.107 billion, while Binance ranks second with a position of $4.204 billion. In addition, the total ETH contract position across the network is $7.861 billion, with a 7.62% decrease in the last 24 hours.

As for the grayscale products, the discount has decreased compared to last week. The net asset value discount rate of GBTC is currently -10.71%, and the discount rates of other grayscale mainstream currency trusts are as follows: ETH (-13.47%) and ETC (-28.60%). There are 11 products with a premium, namely FIL (+575.11%), SOL (+240.62%), LINK (+234.18%), MANA (+160.13%), XLM (+118.32%), LPT (+55.76%), BAT (+57.45%), LTC (+49.04%), ZEN (+45.00%), BCH (+72.73%), and ZEC (+4.17%).

Cryptocurrency-related listed companies are generally affected by the upward trend, with a average increase in stock prices of around 5% in the past week. Among them, the stock price of Coinbase (NASDAQ:COIN), a compliant cryptocurrency platform in the United States, rose 7.66% today to $146.62; the stock price of MicroStrategy (NASDAQ:MSTR), the largest bitcoin holder listed company, rose 4.96% today to $599.39.

Deleveraging in the pullback, expecting a “V” reversal

The overall market suddenly declined today, with no adverse news at the news level and the market sentiment overall positive. One possible reason is that the market has risen sharply recently, and the sentiment for long positions has caused a pullback in the market.

In particular, in the past few days, the funding rate for perpetual contracts on major platforms has soared, reaching new highs one after another. The funding rate for BTC even reached 0.03% at one point. The pullback can better reduce market leverage and achieve a healthier upward trend.

In addition, the views on this round of pullback on social media are relatively objective.

Michael Saylor, co-founder of MicroStrategy, posted on X platform, saying he is prepared for the dip and attached an image of a bullish bitcoin.

CredibleCrypto posted on X platform, stating that this decline did not break the $40,000 mark and it is likely to produce a “V” reversal and break through $60,000.

Civic founder Vinny Lingham posted on the X platform, stating that there is low liquidity in the cryptocurrency market on Sunday evening. This (drop) is just an easy way to scare retail investors.

Will Clemente, co-founder of Reflexivity Research, also posted on the X platform, stating that Bitcoin doubled in value in 2 months without a pullback, so it’s not surprising to see a correction now. The pullback will squeeze out “weak hands” and leverage from the market, laying a more solid foundation for the ultimate rise. Bitcoin’s volatility is a feature, not a flaw.

Based on the comments from these well-known industry OGs, overall sentiment in the market remains positive, with most believing that this is just a period of consolidation before the next rally.

Future: Overall positives remain unchanged, interest rate reduction + halving + spot ETF approval

Although Bitcoin experienced a brief pullback today, it did not fall below $40,000. Its future trajectory will still be influenced by the following factors.

Firstly, the expectation of approval for a Bitcoin spot ETF. The most critical time frame currently is before January 10th of next year. According to Bloomberg analyst James Seyffart, the window for the approval of a Bitcoin spot ETF is expected to be between January 5th and 10th, 2024. If a Bitcoin spot ETF is approved, it could bring in more incremental capital to the cryptocurrency market, thereby driving up the price of Bitcoin, as seen in the case of the surge in price after the approval of a gold spot ETF.

Secondly, the halving event. The Bitcoin halving is scheduled for May 9th, 2024 and as it approaches, based on past halving events, a decrease in issuance speed and supply coupled with assumed constant demand will lead to an increase in price. Additionally, historical data shows that Bitcoin reaches its peak around 368-550 days after halving and reaches its bottom around 779-914 days after halving.

Thirdly, the expectation of a Fed interest rate cut. Currently, major institutions and relevant data are indicating that the likelihood of a Fed interest rate cut in 2024 is gradually increasing.

From market feedback, the cryptocurrency market experiences frequent volatility. Odaily Daily reminds everyone here that there are risks in investment and it is important to exercise caution.

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