The euphoria in the cryptocurrency market was suppressed on January 11th when the prices of most altcoins fell more than 20% as the price of Bitcoin fell sharply.
After selling pressure on Bitcoin (BTC) fell below the USD 40,000 support level on Jan. 10, it rose overnight, pushing the price of the top cryptocurrency to USD 30,229 before reaching a soft support level.
The rapid decline in prices resulted in the liquidation of futures contracts valued at more than $ 2.7 billion. The long candles on the Bitcoin price chart show that the liquidation cascade came quickly as the price fell from $ 41,000 to $ 32,229.
Daily market performance in cryptocurrencies. Source: Coin360
Mark Cuban, owner of Dallas Mavericks, didn’t use the market downturn as an opportunity to suggest that the cryptocurrency market is identical to the internet stock bubble of the 1990s.
Cubans said that “watching crypto trading is just like the internet stock bubble,” but he added that Bitcoin, Ether, and “some others” are likely to follow the path of Amazon and eBay, and their ratings will continue to rise.
Those with a little more skin in the game, like Celsius CEO Alex Mashinsky, view the recent decline as a healthy price correction, and Mashinsky hinted that there is a possibility that BTC could drop to just $ 16,000 before continuing its upward trend.
Traditional markets are feeling the pressure
The traditional financial sector also came under pressure on Monday as the political situation in the United States continues to create tension and uncertainty about the future of the country and the economy.
The S&P 500, Dow, and NASDAQ ended the day down 0.66%, 0.29% and 1.55%, respectively, as Big Tech and FAANG stocks were at their lowest levels since November 26th.
Analysts say the market was due for a correction
Almost every time BTC price drops thousands of dollars, bears, doomers, and nocoiners emerge from the underland to claim the death of Bitcoin.
Given that Bitcoin price rose from $ 17,586 on Dec. 11 to $ 41,950 in less than a month, David Lifchitz, CIO at ExoAlpha, sees this decline as “a healthy correction by intelligent institutions that BTC from $ 20,000 Bought on the way to $ 30,000 “.
Lifchitz said to Cointelegraph:
“One worrying sign was not that the price of Bitcoin was increasing, but rather its speed, that is, the speed at which it was moving. From mid-December to the end of December 2020, the mean amplitude of daily movements in Bitcoin doubled to 8.1%, then it almost doubled again to 15.3% from January 1, 2021 to January 10. The larger the amplitude, the more exchanges took place between buyers and sellers during the day. However, this is a healthy correction to remove the excessive growth of the past 10 days and allow Bitcoin to build a new base towards $ 50,000 and up. ”
Clues to the driving force behind recent price movements could also be found by analyzing patterns on social media.
Bitcoin price against daily sentiment. Source: TheTIE
According to Joshua Frank, CEO and founder of TheTie, an alternative social data analytics platform, the lack of Bitcoin Twitter mentions in December 2020 suggests that a small number of large investors drove the price gains.
In private comments on Cointelegraph, Frank said:
“On January 3rd, both Bitcoin and Crypto 24-hour tweet volumes hit all-time highs. Retail interest has continued into the second week of January, and monthly average Twitter conversations around Bitcoin are at an all-time high in January. Unsurprisingly, this surge in Twitter activity corresponds to a local top at Bitcoin. ” 
BTC / USD daily chart. Source: Coin360
Ether (ETH) price was also hit hard by today’s downturn, falling to $ 914 before finding support. At the time of writing, ETH is down 16.33%, trading at $ 1,033. Of the 50 largest cryptocurrency projects, Neo (NEO) is the only token currently trading in the green. It is up 1.5% and is trading at $ 22.52.
The total market cap for cryptocurrencies is now $ 847 billion, and Bitcoin’s dominance rate is 68.9%.
