The euphoria in the crypto coin market subsided on January 11, as most altcoins saw their prices drop more than 20% as Bitcoin was sold off abruptly.
After falling below the $40,000 support level on January 10, Bitcoin selling pressure (BTC) increased overnight and pushed the price of the crypt currency to $30,229 before it reached a support level.
The rapid drop in price led to the liquidation of more than $2.7 billion in futures contracts; the long candles on the Bitcoin Era show that the liquidation cascade occurred quickly when the price fell from $41,000 to $32,229.
Dallas Mavericks owner Mark Cuban used the market crash as an opportunity to point out that the crypto market is identical to the Internet stock market bubble of the 1990s.
Cuban said that „looking at the crypto market, it’s exactly like the Internet stock market bubble,“ but added that Bitcoin, Ether and „some others“ will probably follow the path of Amazon and eBay and continue to record increases in their valuations.
Those with a little more skin in the game, such as Celsius CEO Alex Mashinsky, see the recent fall as a healthy price correction and Mashinsky hinted that there’s a chance BTC will fall as low as $16,000 before resuming its upward path.
Retail investors could be behind the recent drop in Bitcoin’s price, speculates Nexo’s CEO
The traditional financial sector was also 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, the Dow and the NASDAQ ended the day in the red, with a fall of 0.66%, 0.29% and 1.55%, respectively, as the shares of technology companies and those of FAANG reached their lowest levels since November 26.
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Almost every time the price of BTC falls by thousands of dollars, bassists, doomers and nocoiners emerge from the network landscape to issue death calls for Bitcoin.
Considering that the price of Bitcoin rose from $17,586 on Dec. 11 to $41,950 in less than a month, David Lifchitz, CIO of ExoAlpha sees this setback as a „healthy correction by smart institutions that bought BTC from $20,000 on the road to $30,000.
Lifchitz told Cointelegraph:
„A worrying sign was not that the price of Bitcoin was going up, but its speed – the speed at which it was moving. From mid-December to the end of December 2020, the average amplitude of daily movements in Bitcoin doubled to 8.1 percent, and then nearly doubled again from January 1, 2021, to January 10, to 15.3 percent. The greater the amplitude, the more exchanges took place throughout the day between buyers and sellers. This is a healthy correction to purge the excessive growth of the last 10 days, allowing Bitcoin to build a new base of $50,000 or more.
Clues to the driving force of recent price movements can also be found through analysis of emerging patterns in social networks.
The Bitcoin price vs. daily sentiment
According to Joshua Frank, CEO and founder of TheTie, an alternative social data analysis platform, the lack of mention of Bitcoin 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, both the tweet volume and the 24-hour Bitcoin volume reached an all-time high. Retailer interest has continued through the second week of January and the monthly average of Bitcoin tweets is now at an all-time high in January. Not surprisingly, this increase in Twitter activity has been matched by a local top in Bitcoin.
Ether’s price (ETH) was also hit hard by today’s drop, dropping to $914 before finding support. As of the close of this edition, ETH is down 16.33% and is trading at $1,033.