Bitcoin Dip Drags Crypto Market Down And Here's Why It’s A Great Correction
Corrections between 20-40% during an uptrend Bitcoin and crypto bull market are not only natural and common, but also necessary to occur in order to remain healthy market conditions.
The world’s largest cryptocurrency Bitcoin (BTC) declined with a pullack over 20% on January 11, falling from above $40,000 on Sunday night to a recorded low of $30,420 on Monday. BTC has since bounced and is currently trading around the $34,500 mark.
The current ongoing short term retracement of Bitcoin can be explained by a temporarily strengthening of the US dollar, Bitcoin miners taking profit and an overbought BTC market that simply is undergoing a healthy correction.
Corrections between 20-40% during an uptrend bull market are not only natural and common, but also necessary to occur in order to remain healthy market conditions. Always remind yourself that Bitcoin has had a parabolic uptrend since the market crash of March 2020, to close to $42,000 a few days ago.
The entire crypto market is in the red, with the total market cap of all cryptocurrencies falling from $1.14 trillion to $889 billion at the time of writing. Meanwhile, altcoins such as Ethereum (ETH) is currently down -18% against USD, Litecoin (LTC) -21%, Tron (TRX) -14%, while Klever (KLV) is down -10% against USD.
While it may feel like blood is in the streets for some, this is absolutely not true at this point. We need to remember that just 5 days ago, on January 4, was the first time in history Bitcoin passed $33k.
It is important to note that Bitcoin also recorded its highest 24 hour trading volume on January 11 since BTC’s inception in 2009, as it processed over $116 billion in trading in one single day. It will be interesting to see the development of both the Bitcoin and overall crypto market price in the coming hours and days, as institutional players might see this current downturn as a major buying opportunity.
Finally, incoming US administration’s President-elect Joe Biden, has indicated that a $3 trillion stimulus bill might be on the table. This would of course mean even more dollar printing, and a deepening of the USD inflation and a devaluation of the US dollar’s purchasing power. This is like music to the ears’ of Bitcoin bulls, as BTC was specifically created as a hedge against unlimited fiat money printing and quantitative easing.
In conclusion, a pause and correction in this ongoing Bitcoin and crypto rally is expected and even helpful in pushing the market further and giving it more fuel to crack additional all time highs moving into 2021 as digital assets are becoming increasingly popular universally.
Director of Communications and Marketing at klever.io