Bitcoin prices have seen a significant drop of 12% from their all-time high above $108,000 on December 17th, with the correction appearing to deepen. The asset hit an intraday low of $93,810 during trading in Asia on Monday morning but quickly recovered to reach $96,000 before slipping again. This has resulted in a “bearish engulfing” weekly candle, as reported by crypto analyst “Rekt Capital,” and all gains over the past month have been wiped out in the correction. As a result, Bitcoin is showing signs of transitioning into a multi-week correction.
Historically, Bitcoin price discovery tends to experience corrective weeks around week eight, with the analyst comparing this current situation to previous market cycles. In 2017, week nine was also corrective, but to a lesser extent than week eight. The general trend seems to be that once Bitcoin clears the typically corrective weeks 7 and 8, the retrace gets close to a bottom. This week marks the worst performance for the asset since Donald Trump won the US presidential election in early November, with the Federal Reserve’s cautious policy outlook tempering optimism regarding Trump’s embrace of the crypto sector.
Despite the recent correction, Bitcoin remains up by over 40% since Trump’s victory, showing resilience in the face of market volatility. However, there is concern about holding the $90,000 level for Bitcoin into the year-end, as breaking below that could trigger further liquidations, according to Sean McNulty, director of trading at liquidity provider Arbelos Markets. The low-liquidity environment as the year-end approaches may bring more volatility, with the biggest crypto options expiry event of its history expected on December 27th, involving almost $18 billion in notional value BTC and ETH contracts expiring.
In addition to Bitcoin, some altcoins have shown signs of recovery, with Solana (SOL) up by 2.2% to reach $186, Chainlink (LINK) up by 5.1% to top $23, Toncoin (TON) up by 3.5% to reach $5.50, and Stellar (XLM) up by 3% to trade at $0.363 at the time of writing. This demonstrates that while Bitcoin is experiencing a correction, there are opportunities for gains in certain altcoins. Overall, the cryptocurrency market is facing volatility and uncertainty as the year comes to a close, with various factors contributing to the price movements and market dynamics. Investors and traders will need to closely monitor developments and adjust their strategies accordingly to navigate the current landscape effectively.
