Bitcoin’s Price Fluctuation: A Closer Look
In a dramatic twist, Bitcoin, the leading cryptocurrency, experienced a significant price drop after momentarily exceeding the $100,000 mark. On Thursday, the digital currency’s value surged past $100k, only to plummet by approximately 10% shortly thereafter, revisiting the support level above $92k. By Friday, December 6, during the early Asian trading session, Bitcoin was valued at around $97,680, indicating that the previous day’s breakout was a temporary spike.
Market Impact of Bitcoin’s Sudden Decline
The abrupt selloff led to the liquidation of over $900 million across the cryptocurrency market, predominantly affecting long traders. Bitcoin trading pairs bore the brunt, with losses amounting to approximately $498 million, out of which $421 million were attributed to long traders.
Key Factors Contributing to the Bitcoin Crash
Leverage Trading Cool Down
The Open Interest (OI) for Bitcoin surged beyond $129 billion, while trading volume exceeded $466 billion within the last 24 hours, reflecting heightened investor interest. Despite Tether issuing an additional $1 billion on Ethereum, the Bitcoin market correction appeared unavoidable due to trading volumes that did not match the social media buzz. This necessitated a cooling-off period to attract more buyers and to fuel a sustainable rally above the $100k mark.
Mixed Reactions Among Investors
The mystery surrounding Bitcoin’s abrupt 10% decline within a mere 43 seconds has been unraveled. Institutional investors began offloading their holdings just as retail investors were entering the market at its peak. For example, Meitu, a prominent Chinese firm supportive of Bitcoin, disclosed that they had liquidated their entire holding of 948 BTC. In the wake of Bitcoin’s price dip, some whale investors seized the opportunity to accumulate more BTC, anticipating a new bullish phase in the near future.
Rise of Altcoins
Following Bitcoin’s retreat below the $100k threshold, the altcoin sector has experienced a surge in bullish activity. The TOTAL2 market cap, which excludes Bitcoin, increased by over 3% within the past 24 hours, reaching approximately $1.57 trillion. Concurrently, Bitcoin’s dominance fell by 1%, stabilizing around 55% on Friday, indicating a notable shift in focus towards altcoins. Ethereum (ETH), in particular, has demonstrated significant strength by breaking through a major resistance level of around $3,800, moving closer to its all-time high.
