Bitcoin’s rally hit a major roadblock as the crypto giant experienced a sharp correction, shaking investor confidence. On Monday, Bitcoin dropped by 4.8% to $93,000, giving up over half of its gains from last week. The downturn highlights the persistent volatility in cryptocurrency markets.
With its current price at $92,534.38, Bitcoin remains under pressure. Market observers are keenly analysing whether this correction signals a temporary pullback or the start of a larger downtrend.
Figure 1: Bitcoin Performance Today (November 11th, 2024)
Sharp Decline Sparks Concern
Bitcoin’s price correction erased $4,800 in value on Monday alone, marking a 55% reversal of last week’s $8,100 rally. This swift bitcoin crash surprised traders and analysts alike, especially following its recent climb toward the psychological $100,000 level.
Ryan McMillin, Chief Investment Officer at Merkle Tree Capital, explained the phenomenon. “We see a combination of two catalysts pushing Bitcoin’s price down temporarily,” he said. McMillin cited the sell wall below $100,000 and leveraged long positions as contributing factors.
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Institutional Moves Amid the Chaos
Meanwhile, institutions remain active in the space despite the crypto crash. MicroStrategy disclosed its largest Bitcoin purchase to date, adding $5.4 billion worth of BTC. The firm now holds 386,700 BTC valued at $37.6 billion. This acquisition signals strong institutional confidence in Bitcoin’s long-term growth, even as the market faces heightened volatility.
Profit-Taking Intensifies
Long-term holders took advantage of the recent rally, offloading $60 billion in Bitcoin supply over the past month. This profit-taking mirrors trends observed during the March 2024 peak of $73,400. Analysts warn that these sell-offs often precede a market correction.
Michael Novogratz, CEO of Galaxy Digital, warned about excessive leverage in the system. “The crypto community is levered to the gills, and so there will be a correction,” Novogratz said. He projected Bitcoin’s price could fall to $80,000 before rebounding.
Volatility in Futures Markets
The Bitcoin futures market also reflected rising volatility during this bitcoin correction. Traders hedged against potential losses, with the call-put skew index dropping 30% for options expiring in late December.
Derive founder Nick Forster noted that traders are shifting toward protective strategies. “Traders are hedging against potential price declines,” he said. Options data indicates a 68% chance of Bitcoin moving to $81,493 or $115,579 by December’s end.
Broader Crypto Crash Hits Altcoins
The bitcoin crash sent ripples across the cryptocurrency market. Altcoins recorded mixed performances, with some suffering significant losses. Dogecoin (DOGE) dropped by 9.5% to $0.38, while The Sandbox (SAND) and Stellar (XLM) fell 12% and 10%, respectively.
Despite the broader sell-off, select altcoins defied the trend. Fantom (FTM) surged 13.86%, alongside gains for Sei (SEI) and Algorand (ALGO). Analysts believe Bitcoin’s consolidation may drive capital into promising altcoins in the short term.
Seasonal Trends and Year-End Outlook
Bitcoin’s correction aligns with historical trends as traders rebalance portfolios ahead of the year’s end. December has historically been favourable for Bitcoin, offering hope for a rebound.
Nick Forster emphasised Bitcoin’s structural strengths. “Pullbacks like these are not uncommon in bull markets,” he said. Analysts highlight supportive conditions, including interest rate cuts and evolving regulatory frameworks, as potential tailwinds for Bitcoin.
Despite the downturn, institutional confidence remains strong. MicroStrategy’s recent acquisition and Rumble Inc.’s announcement to allocate $20 million into Bitcoin underscore its appeal as a hedge against inflation and a long-term asset.
What Lies Ahead?
Market analysts predict continued volatility as Bitcoin remains in a price discovery phase. McMillin identified $92,000 as the current support level. “Without proper support here, the bears’ next target could be $87,000,” he said.
Novogratz believes Bitcoin will eventually surpass $100,000. “Normally you hit $100,000, you bounce off a bit,” he said, hinting at potential upside once the market stabilises.
Conclusion
The recent bitcoin price crash underscores the cryptocurrency market’s inherent volatility. Profit-taking, excessive leverage, and macroeconomic conditions have all contributed to the correction.
As Bitcoin consolidates near $92,534, traders are watching key support levels and awaiting a potential bounce. While the short-term outlook remains uncertain, institutional confidence and seasonal trends could pave the way for a recovery in December.
For now, the bitcoin correction serves as a reminder of the risks and opportunities in this rapidly evolving market.
