According to data, the price of Bitcoin recently plunged by more than 7% to $40,887.81. Prior to this, the price of Bitcoin plummeted sharply on Sunday night, falling to $40,300 at one point. Bitcoin broke through $44,000 last week and traded slightly below this level throughout the weekend.
Meanwhile, Ethereum plunged 7% on Monday to $2,202.92. SOL fell 7%, while XRP fell about 8%. According to Coin Metrics, Bitcoin and Ethereum are set to post their worst performances since August 18 and March 9, respectively.
Crypto stocks were also dragged down by the fall. Coinbase fell about 5% and MicroStrategy fell 7%. Mining stocks fell by double digits, with the largest mining stocks Riot Platforms and Marathon Digital plummeting 11% and 12% respectively. Wall Street's favorite CleanSpark and Iris Energy plummeted nearly 15% and 14% respectively.
According to data, Bitcoin rose 12% in December as expectations grew that the U.S. Securities and Exchange Commission could approve the first spot Bitcoin exchange-traded fund in early January. It is estimated that the addressable market size of the U.S. Bitcoin ETF will be about $14 trillion in the first year after its launch, and will increase to about $26 trillion in the second year.
The current pullback is not surprising and is due at some point, the analyst said, adding that these pullbacks are necessary to unwind excessive leverage and make price moves more sustainable.
Bitcoin has been climbing steadily in recent weeks following a prolonged period of market apathy that saw prices trade in a narrow range for months.
The sudden pullback triggered a peak in liquidations. According to data, the plunge liquidated more than $520 million in leveraged trading positions in the cryptocurrency derivatives market, mainly long positions betting on price increases. According to the company's data, this is the largest single-day liquidation volume in at least three months.
Liquidation is the forced closure of a leveraged position, usually because the trader has run out of margin to cover the position. Large liquidation events often mark regional tops or bottoms in price.
A Bitcoin ETF is just the first in a series of positive catalysts for the cryptocurrency over the next year. While potential Bitcoin investors are on the sidelines regarding ETFs, others in the market are optimistic about price increases in the months following Bitcoin’s halving, which is expected to take place in the spring of 2024.
They are also watching the Federal Reserve — especially this week, with the central bank’s final policy meeting of the year set to begin on Tuesday — for clues that the central bank might cut interest rates sometime in 2024.
Bitcoin has been holding above the 20-day exponential moving average ($40,870) but the bulls have not been able to initiate a strong relief rally. This shows indecision in buying at higher levels.
Bitcoin Price Analysis
The negative divergence on the relative strength index (RSI) suggests that the positive momentum may be slowing down. This puts the 20-day EMA at risk of breaking down. If this happens, the BTC/USDT pair could plummet to the 50-day simple moving average ($37,707).
Meanwhile, the bulls might have other plans. They will try to push the price to the overhead resistance at $44,700. This level is expected to witness a tough battle between the bulls and bears. If the buyers win, the pair could surge to $48,000.
Ethereum Price Analysis
The bears are trying to extend their advantage by pulling the price below the 20-day EMA ($2,192). If lower levels are sustained, the selling is likely to accelerate and the ETH/USDT pair can drop to the 50-day SMA ($2,029).
Conversely, if the price rises and rises above $2,250, it will indicate that lower levels continue to attract buyers. The pair will then attempt to retest the 52-week high at 2,403. A rebound above this resistance could start the next leg of the uptrend towards $3,000.
Solana Price Analysis
The bears sold near $72 and again pulled the price to the 20-day EMA on Dec. 13. The negative divergence on the RSI suggests that the bullish momentum is fading. If the price breaks below the 20-day EMA, the selling is likely to accelerate and the SOL/USDT pair can drop to the 50-day SMA ($53.73).
Alternatively, if the price turns up from the current levels, it will indicate that the bulls continue to defend the 20-day EMA with great vigor. The pair could then move up to $78.
Dogecoin Price Analysis
A strong rebound from the 20-day EMA will indicate that traders continue to buy on dips. The bulls will then make another attempt to overcome the $0.11 barrier. If they succeed, the DOGE/USDT pair could surge to $0.14 and subsequently to $0.16.
This bullish view will be negated if the price continues to move lower and breaks below the 20-day EMA. If that happens, the pair could slide towards the 50-day SMA ($0.08) and subsequently to $0.07.
BNB Price Analysis
The 20-day EMA ($238) has started to turn up and the RSI is in the positive territory, which suggests that bulls have the upper hand. The price is likely to touch the neckline, where the bears are likely to defend strongly. If the bulls overcome this hurdle, the BNB/USDT pair is likely to start a fresh increase towards the pattern objective of $333.
Any decline from the current levels is likely to find support at the moving averages. A break below the moving averages will indicate that the bulls are losing control. The pair is then likely to drop to the important support of $223.