- Bitcoin price reached an all-time high of $41,941 on January 8
- The massive correction pulled BTC price down by 26%
- Over a$2 billion long Bitcoin positions liquidated in 24 hours
Bitcoin pulled back after an impressive rally to a record high of $41,941 last Friday, January 8. The leading crypto continued to correct since then, dropping to the lows of $31,115.33 on Monday.
The downside correction of nearly 22% is the biggest Bitcoin price drop since the mid-March 2020 market crash, caused by a global pandemic. The BTC market cap declined accordingly to $659 billion.
Broke support levels
Bitcoin lost almost 18% of its value during the past 24 hours. It broke a few critical support levels of nearly $40,000 and $39,000 before falling down to the next major $34,500 support.
The price floated at the latter key zone for a few hours, however, dropped down to test the lows of $32,538 on crypto exchanges. It recovered to over $35,300, but pulled back down and sits at around $32,600 at the time of publishing.
If Bitcoin fails to stay above the $32,000 level, the drop-down to another $29,000 support is expected.
The price drop created panic among both individual and institutional investors. As shown by the data of Bybt, the number of BTC liquidations highly increased within the past 24 hours.
Nearly 270k liquidations were made, taking almost $2,77 billion worth of BTC out of the market. The largest single liquidation order of nearly $10 million BTC happened on the Bitmex exchange before $90 million of BTC futures contracts were liquidated in 10 minutes early on Monday.
On the flipside
- Bitcoin grew more than 700% from a March 12 market crash lows.
- Increased demand from institutional investors has powered BTC uptrend in 2020.
- Sharp corrections have been common after Bitcoin has reached new all-time highs.
Market experts warned of a decline after Bitcoin surpassed the $40,000 level just days after hitting the previous milestone of $30,000. As Gavin Smith, the CEO of Panxora Group, told Reuters:
While further growth is inevitable, investors should not expect this to move in a straight line. We can expect dips as sharp as 25% at times as investors periodically withdraw profits.
The legendary mutual fund investor Bill Miller told the CNBC that those investors who are not ready to handle up to 80% corrections probably should not hold Bitcoin. However, he admitted that BTC becomes less risky the higher its price goes. He also expects the BTC price to increase 50% to 100% from its recent ATH within the next 12 to 18 months.
Meanwhile venture capitalist Tim Draper calls the current BTC correction an institutional manipulation. According to his tweet “Banks don’t like Bitcoin because it makes them less relevant, so you are seeing their attempted manipulation over the weekend.” Holders should expect a $250k price by the end of 2022, or in early 2023, he added.
One of the biggest investment banks JPMorgan predicts Bitcoin to increase up to $146 in the long term due to its competition with gold. The benchmark crypto, however, will have to lower its volatility “substantially” in order to give institutional investors more confidence for making large entrances, report the bank’s strategists.