Bitcoin (BTC) faced a significant correction and fell sharply by 9% on December 11, slipping to $42,140. This drop wiped out the gains made last week, bringing BTC down to its lowest level in four months at $41,005, possibly signalling a serious market change.
Negative Sentiment in Cryptocurrency Markets
The price correction in Bitcoin quickly caused a volatility effect among altcoins, and many people witnessed double-digit declines. However, analysts and market experts see this fall as a natural progression in the ongoing market cycle. A correction of this nature was expected after a two-month uptrend.
Will Clemente, co-founder of Reflexivity Research and a crypto analyst, interprets the market correction as a way to eliminate weak positions and alleviate high-leveraged crypto markets, linking this volatility to a necessary stage in market evolution. In addition, Remen, a well-known crypto analyst, expressed his belief that this recent setback could pave the way for an altcoin bull run. He predicts a long Bitcoin consolidation period before a potential uptrend, referencing Bitcoin’s peak dominance.
The market drop on December 11 cleared the environment for recalibration by liquidating leveraged positions worth $400 million. Santiment, an on-chain analytics firm, pointed to a significant increase in social media posts advocating ‘buying the dip’. This increase expresses collective confidence in the community about an upcoming rise in altcoin prices.
Re-Testing Process in Bitcoin
Additionally, the potential drop in Bitcoin’s dominance from around 54% to re-testing support at about 40% further strengthens the optimistic outlook for XRP, Ether, Cardano, Solana, and Shiba Inu. The momentum behind BTC that started in October was significant, and the leading cryptocurrency increased its value by about $10,000 just last month. Another crypto analyst, Hitesh.eth, highlights BTC’s rise after a stagnant six-month period, pointing to an effective change in market trend.
As on-chain data showing the continuous accumulation of accounts holding more than 1 BTC indicates, it has increased by 50% since its rise in October. This uptrend can be supported by institutional entries and the growing interest of financial giants, especially in anticipation of the opening spot of the Bitcoin exchange-traded fund before the important Bitcoin halving event in April 2024.
