In the previous edition of weekly crypto news, we talked about Bitcoin and ETH reaching the mark of $44,000 and $2,200, respectively. But who would have thought? On the first day of this week, Monday blues, a huge Crypto Prices Fall awaited us all. Once again, this proved that the crypto landscape is so dynamic.
What happened? Crypto Prices Fall:
On December 11th, 2023 (Monday Morning), Bitcoin dropped to 5% in the early Asian session. This led to the Bitcoin to fall from $43,800 to $41,780. At the time of writing this news article, the price of BTC stands at $42,206, which is still 4.2% less than the previous year. This is the biggest dip in terms of prices since mid-October when the crypto exchange surged 65% to the price and trading was around $26,800.
As soon as this news went viral, The Kobeissi Letter (a renowned digital market analyst) posted on X regarding the same information. In their post, they write,
“After its eight straight green weeks, Bitcoin is finally taking a breather.
Interestingly, the decline also comes during low volume and liquidity.”
Ultimately, they put up a question that is seeking enough attention from crypto enthusiasts.
“Is liquidity drying up after the hot run higher?”
Somehow, Bitcoin survived this huge price drop-off, but altcoins were the ones that were mainly affected. On December 11th, Ethereum fell over 9%, XRP lost over 10%, Solana plunged by 13% and Cardano lost 14%. However, the self-attracted altcoins have partially recovered from the losses.
What are the reasons behind Crypto Prices Fall:
1. Massive amount of Liquidity:
Over the past few weeks, crypto scams and stealing have become common practice. According to the Blockchain security firm, November 2023 was the most damaging month for crypto liquidity and scams. Over $363 million was involved in liquidity in November 2023 only. Therefore, this can lead to investors selling their Bitcoin to avoid any kind of liquidity in the future.
2. Funding rates:
In the last few days, the funding rates of Bitcoin were overpriced. According to Velo Data’s source, the funding rates for leading cryptocurrencies such as Bitcoin and ETH consistently touched the 0.15%-mark last week. As a result, this led to an overheated perpetual crypto futures market. This can be a valid reason behind the drop in the prices of cryptocurrencies.
Many crypto analysts are also saying,
“The drop in the prices of Bitcoin is necessary and will benefit the 2024 crypto market. In a crypto market, it is essential to have positive funding rates at a reasonable price. As happened recently, a negative funding rate (overpriced) always results in a market crash or price drop.”
Since the prices have dropped, the funding rates will also drop, establishing a positive funding rate.
3. Parabolic Movements:
Many crypto analysts have noticed the pattern that indicates the price drop is near. In the last few years, whenever Bitcoin’s price index shows parabolic movements, it can be said that the price drop is near. Since October, Bitcoin’s price has surged, resulting in an organized parabolic pattern.
It’s just a theory; in most cases, it has been proven correctly. However, in some cases, this theory is found to be irrelevant.
(Source: CoinDesk’s Bitcoin Live Index)
Where is Bitcoin, ETH & SOL Heading? Crypto Prices Fall or Surge
According to CrediBULL Crypto,
“Whenever we get major flushes at this stage of the market, V-reversals are going to be a lot more common than a typical “sideway basing period” that we have gotten used to seeing.”
So, we can expect Bitcoin to do V-reversals through price ups and downs.
As per Crypto Rover, this will end the parabolic pattern of Bitcoin’s prices. Instead, Bitcoin will follow the super-exponential pattern, with prices dropping to 39.7K. However, the prices will surge due to the Bitcoin ETF approval. Then, prices will consolidate a bit and show a huge surge in the 2nd week of January.
December 11th, 2023, also ends the pattern of Eight weekly candles in green. The last time such formation was made was 2020 during the Bull market.
If we talk about Ethereum, Solana, and Cardona’s prices, there is a low probability for them to witness a jump soon.
Currently, XRP is stabilizing, while other cryptocurrencies are still suffering.
Stay Tuned!
The crypto world is ever-evolving and dynamic, and the drop in prices again proved this statement. No one thought that major cryptocurrencies would tank in the healthy days of currency, but they did. Stay tuned with Coin Informer and get the latest updates and news. Make sure to read our upcoming blog, too.
