The euphoria in the crypto-currency market was abolished on January 11 because the prices of altcoins dropped their prices by more than 20% because the Bitcoin price sold sharply.
After falling below the $ 40,000 support level on January 10, the selling pressure for Bitcoin (BTC) increased overnight, pushing the price of the top cryptocurrency to $ 30,229 before reaching a soft support level.
The rapid fall in prices led to the liquidation of futures contracts of more than $ 2.7 billion, and the long candles on the Bitcoin price chart show that the cascade of liquidations took place quickly, as the price dropped from $ 41,000 to $ 32,229 has.
Mark Cuban, owner of Dallas Mavericks, uses the downturn in the market as no opportunity to point out that the cryptocurrency market is identical to the Internet stock bubble of the 1990s.
Cuban said that ‘looking at trading cryptocurrencies, it’s just like the internet stock bubble’, but he added that Bitcoin, Ether and ‘a few others’ are likely to follow the path of Amazon and eBay and see their valuations rise.
Those with a little more skin in the game, such as Celsius CEO Alex Mashinsky, see the recent drop as a healthy price correction and Mashinsky pointed out that there is a possibility that BTC will fall as low as $ 16,000 before resuming his upward pull.
Traditional markets feel the pressure
The traditional financial sector was also under pressure on Monday as the political situation in the United States generated tensions and uncertainty about the future of the country and the economy.
The S&P 500, Dow and the NASDAQ all ended the day in the red, with 0.66%, 0.29% and 1.55% respectively, as large-tech and FAANG stocks reached their lowest levels since November 26.
Analysts say the market needs to be corrected
Almost every time the BTC price drops by thousands of dollars, bears, doomers and nocoiners come out of the netherlands to issue calls for the death of Bitcoin.
As the Bitcoin price rose from $ 17,586 in less than a month on December 11 to $ 41,950, David Lifchitz, CIO of ExoAlpha, views this downturn as a “healthy correction by smart institutions offering BTC of $ 20,000 bought on the way to $ 30,000 “.
Lifchitz told Cointelegraph:
‘One worrying sign was not that the Bitcoin price was rising, but the speed, that is, the speed at which it was moving. From mid-December to the end of December 2020, the median amplitude of daily movements in Bitcoin doubled to 8.1%, and it almost doubled again from January 1, 2021 to January 10 to 15.3%. The greater the amplitude, the more exchanges took place throughout the day between buyers and sellers. However, it is a sound correction to erase the excessive growth of the past ten days, enabling Bitcoin to build a new base for more than $ 50,000 and above. ”
Tips on the driving force behind recent price movements can also be found by analyzing patterns that emerge on social media.
According to Joshua Frank, CEO and founder of TheTie, an alternative platform for data social analysis, the lack of Bitcoin Twitter in December 2020 indicates that a small number of large investors have caused price increases to rise.
In a private comment to Cointelegraph, Frank said:
‘On the third of January, both the 24-hour tweet volume of Bitcoin and crypto peaked. The retail interest continued during the second week of January and the monthly average Twitter conversations around Bitcoin peaked in January. It is not surprising that this increase in Twitter activity coincides with a local peak on Bitcoin. ‘
Ether (ETH)’s price was also hit hard by today’s downturn, falling to $ 914 before gaining support. At the time of writing, ETH was down 16.33%, trading at $ 1,033. Of the top 50 cryptocurrency projects, Neo (NEO), the only sign currently trading in the green on the day, is up 1.5% at $ 22.52.
The total market capitalization for cryptocurrency now stands at $ 847 billion and Bitcoin’s dominance rate is 68.9%.