Following the recent rally driven by Bitcoin's price surge above $89k, the crypto market has registered significant losses over the past 24 hours. Let's explore the main reasons behind this decline and the future expectations.
Leveraged Market Cool-off
The cryptocurrency market has undergone more than $2 billion in forced liquidations over the past three days. Amid heightened crypto volatility, over $928 million was liquidated in the past 24 hours, mostly involving long traders. On the Binance exchange, over 51% of leveraged traders are short, suggesting low optimism for a further market rally in the coming days.
Major Shift from Crowd’s Sentiment
Following the Bitcoin price breakout triggered by Donald Trump's election victory in the US, the fear of further crypto capitulation has significantly diminished. Bitcoin and Ethereum’s fear and greed index rallied above 80%, indicating extreme greed in the market. However, the crypto market often undergoes midterm correction whenever the crowd becomes excessively bullish.
Midterm Expectations
Based on historical trends, Bitcoin's dominance is expected to remain strong against the altcoin market until the first few weeks of January 2025. Bitcoin price is expected to find crucial support between $83,250 and $85,800, where 312k addresses purchased 282k BTCs.
Amidst ongoing rallies and mass greed in the cryptocurrency market, it is always wise to prepare for potential corrections. Traders should manage their risks and be ready for possible short-term fluctuations.
