The euphoria in the cryptocurrency market was stifled in January 11, when most altcoins saw their prices drop by more than 20%, as Bitcoin’s price fell dramatically.
After falling below the $ 40,000 support level on January 10, Bitcoin (BTC) selling pressure increased overnight and pushed the cryptocurrency price down to $ 30,229 before a soft support level was reached .
The rapid decline in price has led to the settlement of more than $ 2.7 billion in futures contracts and the long candles on the Bitcoin price chart show that the settlement cascade occurred quickly when the price fell from $ 41,000 to $ 32,229 .
Dallas Mavericks owner Mark Cuban took advantage of the slowdown in the market as an opportunity to point out that the cryptocurrency market is identical to the Internet stock bubble of the 1990s.
Cuban said that “watching the cryptocurrency trade is just like the Internet stock bubble,” but added that Bitcoin, Ether and “a few others” are likely to follow Amazon and eBay and continue to see their valuations rise.
Those with a little more skin in the game, like Celsius CEO Alex Mashinsky, see the recent drop as a healthy price correction and Mashinsky hinted that there is a possibility that BTC could fall as low as $ 16,000 before resuming your journey up.
Traditional markets feel pressure
The traditional financial sector also found itself under pressure on Monday, as the political situation in the United States continues to generate tension and uncertainty about the future of the country and the economy.
The S&P 500, Dow and NASDAQ ended the day in the red, down 0.66%, 0.29% and 1.55%, respectively, as big tech and FAANG stocks reached their lowest levels since November 26th.
Analysts say the market needed a correction
Almost every time the price of BTC falls thousands of dollars, bears, condemns and nocoiners emerge from the underground landscape to issue calls for the death of Bitcoin.
Considering that the price of Bitcoin rose from $ 17,586 on December 11 to $ 41,950 in less than a month, David Lifchitz, CIO at ExoAlpha sees this retraction as a “healthy correction by smart institutions that bought $ 20,000 BTC up to US $ 30,000 ”.
Lifchitz told Cointelegraph:
“A worrying sign was not that the price of Bitcoin was rising, but its speed, that is, the speed with which it moved. From mid-December to the end of December 2020, the median range of daily movements in Bitcoin doubled to 8.1%, then almost doubled again from January 1, 2021 to January 10 to 15.3%. The greater the breadth, the more exchanges occur throughout the day between buyers and sellers. This is a healthy fix to eliminate the excessive growth of the last 10 days, allowing Bitcoin to build a new base for $ 50,000 or more. ”
Suggestions about the driving force behind recent price movements can also be found by looking at emerging patterns on social media.
According to Joshua Frank, CEO and founder of TheTie, an alternative social data analysis platform, the lack of Bitcoin quotes on Twitter in December 2020 indicates that a small number of large investors were driving price gains.
In private comments to Cointelegraph, Frank said:
“On January 3, the 24-hour Bitcoin and cryptographic tweet volume reached an all-time high. Retail interest continued during the second week of January and the monthly average of Twitter conversations about Bitcoin is now at an all-time high in January. Unsurprisingly, this increase in Twitter activity corresponded to a local Bitcoin top. ”
The price of Ether (ETH) was also hit hard by today’s slowdown, dropping to $ 914 before finding support. At the time of this writing, ETH fell 16.33% and was trading at $ 1,033. Of the top 50 cryptocurrency projects, the only token currently traded in green on the day is Neo (NEO), up 1.5% and trading at $ 22.52.
The overall capitalization of the cryptocurrency market is now at $ 847 billion and Bitcoin’s dominance rate is 68.9%.