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In summary
- Bitcoin fell 4.8% on Monday, losing more than $4,800, more than half of its gains from last week.
- Analysts view the decline as a normal correction before the end of the year, with a possible test of $100,000.
- Liquidations of long positions reached $550 million, with 70% coming from bullish bets.
Bitcoin witnessed heavy selling on Monday, with the asset’s single-day performance giving up more than half of last week’s gains.
The world’s largest Cryptocurrency fell 4.8% on the day to just over $93,000, with Monday’s drop totaling more than $4,800. To put it in context, that’s more than 55% of last week’s $8,100 increase.
Still, analysts say the move is likely part of traders rebalancing their positions as they approach the end of the year, especially late December, which has proven to be a favorable month in the past.
“We see a combination of two catalysts temporarily pushing the price of Bitcoin lower,” Ryan McMillin, chief investment officer at cryptocurrency fund manager Merkle Tree Capital, told Decrypt.
He pointed to a “sell wall” just below the “psychological barrier” around $100,000, where traders are looking to capitalize on an explosive run following President-elect Donald Trump’s victory three weeks ago.
McMillin also pointed to a buildup of leveraged long positions, or those betting on higher prices, as “too tempting” for market makers not to pursue.
In other words, market makers who facilitate liquidity can intentionally drive prices lower to cause a liquidation of those leveraged long positions.
Liquidations soared on Monday to $550 million, of which 70% came from long positions, following a similar trend seen on Sunday. Still, McMillin says this is just part of normal market behavior.
“There isn’t much liquidity below $92,000, so that appears to be the floor for this move,” McMillin said. “We expect the market to retest $100,000 before the end of the week.”
Others agree, stating that Monday’s move is part of typical market dynamics, with traders hedging against potential downside risks, likely in response to recent moves.
“Pullbacks like these are not unusual in bull markets,” Nick Forster, founder of DeFi derivatives protocol Derive, told Decrypt. “We are seeing strong structural tailwinds for Bitcoin, strengthened by favorable conditions such as the interest rate cut cycle and evolving regulatory frameworks.”
Other cryptocurrencies in the top 10 by market capitalization have also fallen, with Dogecoin (DOGE) being the hardest hit, falling about 9.5% to $0.38, according to data from CoinGecko.
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