On December 11, at 2:15 am UTC, Bitcoin (BTC) experienced a sharp decline, momentarily dipping below the $41,000 mark. This drop represented a significant 6.5% decrease from its previous value of $43,357, reaching a low of $40,659 within just 20 minutes.
As of the latest reports, Bitcoin has seen a slight recovery from this low, trading at around $41,960, according to TradingView data. Ethereum (ETH), the second-largest cryptocurrency by market capitalization, also witnessed a steep decline, dropping over 8.9% in the same timeframe. ETH has since somewhat stabilized, currently trading at $2,233, which is a 5.3% decrease for the day.
Other major cryptocurrencies, including Binance Coin (BNB), XRP, and Solana (SOL), have also posted losses during this period.
Data from CoinGlass indicates that this abrupt drop led to the liquidation of over $270 million in long positions. Additionally, there was a significant reduction in open interest for BTC, with about $1.2 billion wiped out, leaving the current open interest around $17.9 billion.
Interestingly, this drawdown occurred shortly after Scott Melker, also known as the Wolf of All Streets, commented on Bitcoin closing its eighth consecutive green weekly candle, humorously asking, “When correction, sir?”
This downturn marks Bitcoin’s largest single-day decline in over a month. Despite this, Bitcoin has shown considerable growth over the past month, increasing by more than 12%. Since the beginning of the year, Bitcoin has rallied by over 150%. This uptrend is largely attributed to expectations that the U.S. Securities and Exchange Commission (SEC) will approve several spot Bitcoin ETFs, potentially allowing large institutions to significantly invest in the asset for the first time.
Further fueling Bitcoin’s rally is the broader market anticipation that the U.S. Federal Reserve might start reducing interest rates around mid-2024.
Investors are also closely watching the upcoming inflation data and the final Federal Open Market Committee meeting of 2023. Most analysts are optimistic about improvements in core inflation and anticipate that the Fed will maintain the current interest rates.
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