On December 12th, the cryptocurrency market experienced a sharp decline, dropping below the $42,000 level. Typically, a bull-oriented market, this time faced a sudden and steep fall. Bitcoin (BTC), known as the largest cryptocurrency by market value, saw a 7% drop, and the top 20 altcoins including Ethereum (ETH), XRP, Solana (SOL), Shiba Inu (SHIB), and Cardano (ADA) also witnessed similar declines.
Following the sudden price movements in the market, analysts have suggested that this correction is actually healthy and a natural reaction to the unstoppable price increases over the last few months. For example, the price of BTC doubled in two months, raising concerns about over-expansion during the rally. The price correction marked a consolidation period before any further upward movement, indicating the formation of a healthy market structure.
Developments in the United States are also affecting the market. Investors are increasingly worried about the impact of important inflation data releases and the Federal Reserve’s interest rate decisions on prices.
Technical analyses bring more clarity to the idea of an expected correction. Last week, analysts highlighted the existence of a “CME Gap” at $39,700, which is considered a support level that needed to be filled on Bitcoin charts. Data from platforms like CoinGlass shows that significant liquidations of over $400 million occurred within a few hours, indicating investors’ anxiety and their rush to exit their positions.
The cryptocurrency market continues to be a dynamic and developing environment, influenced by various external factors and internal dynamics. The recent correction reminds us that volatility in this space is inevitable. However, for investors who remain committed to the long-term potential of blockchain technology and cryptocurrencies, this pullback represents an opportunity for learning, adaptation, and developing strategies to continue growing in this exciting and constantly evolving market.