Crypto markets are a sea of red this Monday morning, with Bitcoin which has enjoyed an upward trend since the middle of September slumping and altcoins taking heavy losses.
Specifically, the Bitcoin price suddenly dropped 6.5% to fall below $41,000 on Monday morning, wiping out around five days of gains. Also, Glassnode data shows that liquidations are in the hundreds of millions over the past few hours.
This shows that the market has opened the new week with volatility and market traders are at a crossroads regarding what to expect and make out of the market as we head towards the festive season.
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Below is a nuanced view of the situation and what could be expected going forward.
Bitcoin price situation
Bitcoin price briefly fell below $41,000 on Monday morning following a sudden 6.5% drawdown from $43,000 to as low as $40,659 in a span of 20 minutes. At press time, Bitcoin has recovered a bit and is now exchanging at $42,341, per data from Coinmarketcap.
The price of Ether, the second-largest cryptocurrency by market cap, also declined abruptly, falling more than 8.9% in the same time frame. The price of ETH has since stabilized and is trading for $2,248. Other large-cap crypto assets, including BNB, XRP and Solana also recorded losses.
According to data from CoinGlass, the brief drop caused more than $270 million worth of long positions to be liquidated. The decline also wiped out some $1.2 billion in open interest on BTC, which is currently sitting around $17.9 billion.
Notably, this drawdown marks the largest single-day decline for Bitcoin in over a month, with the asset having grown more than 12% over the last 30 days. However, the flagship digital asset has rallied more than 150% since the turn of the year and the uptrend has been primarily driven by the expectation that the United States Securities and Exchange Commission will approve several spot Bitcoin exchange-traded funds (ETF), allowing large institutions to gain significant exposure to the asset for the first time.
A correction is underway
A correction during a bull run is a slight retracement of market price, before the continuation of upward movement. Most market analysts believe this is what is currently at play with Bitcoin price.
According to Will Clemente, co-founder of Reflexivity Research, there will be an imminent correction in the price of Bitcoin, which is a call for investors and markets to be cautious.
Clemente explained on X (formerly Twitter) that the correction would be sharp and allow the market to shake off “greedy”, leveraged hands. Employing Glassnode data, Clemente showed how price corrections have been a consistent trend in Bitcoin’s life cycle.
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Clemente used Glassnode’s data to explain that Bitcoin price corrections, especially during bull runs, create room for stronger foundations for eventual moves higher. He noted that a Bitcoin price correction would not be surprising, considering that it has nearly doubled in the past two months without pullbacks.
On the flip side, the prominent crypto trader Josh Olszewicz with the handle ‘CarpeNoctom’ on X (Twitter) completed an empirical study that suggests there is a considerable chance that Bitcoin could collapse and possibly drop below the $38,000 mark.
By deploying a daily Kijun line (a pivotal technical signal in the world of cryptocurrency trading) analysis, Olszewicz maintains a gloomy outlook on Bitcoin.
Ultimately, how long this correction would take and the period it will take for Bitcoin to resume an upward trajectory cannot be ascertained. However, it is important for market players to evaluate the situation as it stands and make plausible predictions.
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