Bitcoin falls 7% to around $40,000 — some think the decline won’t last long | CoinDesk JAPAN

• Bitcoin has fallen more than 7%, its worst daily drawdown since August, as the crypto market cools.
• According to market strategists at LMAX, this pullback could send Bitcoin prices to new highs towards the end of the year as excess leverage is liquidated and the market resets.

Bitcoin (BTC) has suffered its largest daily drawdown in nearly four months in the past roughly 24 hours amid massive liquidations of leveraged positions, leading traders to believe that Bitcoin is on the brink of an at-times sharp bull run. I remembered that I was making adjustments.

Flash crash plunges prices to nearly $40,500

Bitcoin plummeted from about $43,800 (approximately 6,351,000 yen, exchanged at 145 yen to the dollar) to nearly $40,500 in a few minutes’ “flash crash” on the 10th. It quickly recovered to $42,400, but in the afternoon hours of the 11th it began to fall again, riding an uptrend to $40,200, the level it had broken a week earlier.

Although still down nearly 7% in the past 24 hours, Bitcoin has rebounded to above $41,000 at the time of writing. However, it is expected to be the worst daily drawdown since Bitcoin fell below $25,000 on August 17th.

Ethereum (ETH) also fell by more than 7% during the same period, falling below $2,200 (approximately 319,000 yen, equivalent to 145 yen to the dollar).

Most other crypto assets also suffered significant declines, with XRP (XRP), Dogecoin (DOGE), Chainlink (LINK), and Cardano (ADA) dropping between 8% and 12% on the 11th. Occurred.

Some altcoins bucked the trend, with Avalanche (AVAX), Injective (INJ), and Optimism (OP) rising.

The CoinDesk Market Index (CMI), which measures the performance of the entire crypto asset market, also fell by more than 7%, highlighting the serious overall decline.

Expected to rise in the future

Sharp drawdowns have occurred in previous Bitcoin bull cycles, but they have been mostly absent in recent weeks as Bitcoin has risen almost nonstop from $27,000 to nearly $45,000 since October 1st. I couldn’t see it.

Will Clemene, a market analyst specializing in Bitcoin, said the current correction was not surprising and was expected to happen at some point. He explained that these pullbacks are necessary to de-leverage towards a more sustainable price movement.

“Bitcoin just nearly doubled in two months without a pullback, so the correction is not all that surprising,” Clemente said. “It allows for a stronger foundation from which to move to higher levels.”

The selloff led to the liquidation of more than $520 million in leveraged trading positions in the crypto derivatives market, mainly long ones, according to data from CoinGlass. This was the largest single-day liquidation amount in at least three months.

Daily crypto asset liquidation amount (CoinGlass)

Joel Kruger, market strategist at LMAX Group, said the selloff was exacerbated by a chain of liquidations of leveraged long positions as traders faced margin calls. Furthermore, the strength of the US dollar may have added to the weakness in the crypto asset market.

Krueger pointed out that this pullback has brought the crypto asset market down from overbought levels, and the market could continue to rise toward new highs. “We expect the decline in Bitcoin and Ethereum to end fairly quickly, and support continued bullishness towards higher lows and year-to-date highs,” he said. The outlook remains bright.”

｜Translation and editing: Rinan Hayashi
｜Image: CoinDesk
｜Original text: Bitcoin Dips 7% to Near $40K; Pullback Will Be Short-Lived, Say Experts