- Bitcoin’s Volatility: The rapid and substantial decline in Bitcoin’s value highlights the ongoing volatility inherent in digital asset markets, with subsequent implications for other cryptocurrencies.
- Market Expectations and Impact: Expectations surrounding the SEC decision on Bitcoin ETFs and speculation about the Federal Reserve’s future actions continue to shape investor sentiment and contribute to volatility in the value of the cryptocurrency.
The cryptocurrency market faced a sudden shock. Bitcoin It plunged 6.5% early on December 11, breaking the $41,000 mark with a sharp decline in just 20 minutes. This sudden change wiped out nearly five days of steady gains, sending ripples through the wider digital asset landscape.
The notable drop occurred precisely at 2:15 a.m. UTC, when Bitcoin quickly plummeted from $43,357 to a low of $40,659. Despite the slight recovery, the leading cryptocurrency remained at $41,960 at the time of reporting, according to TradingView data.
Cryptocurrency Market Chaos: Bitcoin’s Rapid Plunge
Ethereum, the second-largest cryptocurrency by market capitalization, mirrored the decline, experiencing a sharp 8.9% decline over the same period. Currently, ETH has stabilized at $2,233, down 5.3% for the day.
The impact of this market upheaval went beyond Bitcoin and Ethereum to other major cryptocurrency assets such as BNB, XRP, and Solana, which also recorded losses during this period.
The sudden sell-off led to the liquidation of over $270 million in long positions, according to CoinGlass data. Moreover, this recession wiped out approximately $1.2 billion in open interest for BTC, bringing the current figure to approximately $17.9 billion.
The surprising drop came shortly after Wolf of All Street’s Scott Melker noted Bitcoin’s eighth consecutive green weekly candle close and playfully questioned the possibility of a correction.
#Bitcoin The one that just closed was the 8th green weekly candle in a row.
This week’s candle was a monster.
When do I fix it? pic.twitter.com/xxWjTxxLLr
— Wolves on Every Street (@scottmelker) December 11, 2023
This notable decline represents Bitcoin’s biggest single-day decline in over a month, despite the asset rising more than 12% over the past 30 days. But in a broader context, Bitcoin is on a strong upward trajectory, surging more than 150% since the beginning of the year.
Market Speculation and Impact on Bitcoin’s Trajectory
Much of this bullish momentum has been fueled by rising expectations surrounding the possible approval of various spot Bitcoin exchange-traded funds. (ETF) By the U.S. Securities and Exchange Commission (SEC). These anticipated approvals provide significant institutional exposure to the asset for the first time.
Market sentiment was also buoyed by speculation that the US Federal Reserve (Fed) may begin cutting interest rates by mid-2024.
As investors prepare for future inflation data and the final Federal Open Market Committee meeting in 2023, there is a general expectation that core inflation numbers will improve. Most analysts expect the Federal Reserve to maintain current interest rates despite this situation.