Bitcoin hovered near $42,000 following a tumultuous period that saw a nearly 8% decline in the cryptocurrency, sparking forecasts of increased volatility as the year draws to a close. This drop, spanning Saturday through Monday, marked the most significant three-day downturn since mid-August, affecting broader crypto markets as well.
Speculators trimming positions in anticipation of a Federal Reserve meeting seemed a possible cause for this pullback, though experts struggled to pinpoint a definitive trigger. Many viewed the retreat as a natural consolidation after Bitcoin’s remarkable 152% surge in 2023.
The market’s recent turbulence followed a period of heightened optimism surrounding the potential approval of the first US spot Bitcoin exchange-traded funds, anticipated to drive more demand for the digital currency.
Caroline Mauron, co-founder of Orbit Markets, noted, “Crypto saw profit-taking after a rapid surge in recent weeks,” predicting further volatility as the ETF decision deadline nears, compounded by lower liquidity during the holiday period.
Anticipation mounts for approvals of US spot Bitcoin ETFs from companies like BlackRock Inc., expected to gain Securities & Exchange Commission approval by next month, adding a positive note to market sentiment.
Additionally, the Bitcoin halving projected for 2024, where mining rewards are halved, is seen as another boost to the market. However, recent data from Coinglass revealed approximately $455 million in liquidated crypto positions on December 11, signaling the highest level of liquidations since mid-September.
Greg Moritz, co-founder at AltTab Capital, views this decline as more of a technical resistance challenge rather than a fundamental shift. Bitcoin edged up around 1% to $41,737 on Tuesday, while other tokens like BNB and Avalanche also saw upward movement, with the top 100 crypto coins showing a moderate gain.
