Having just seen the 'Christmas rally', the market experienced a brief week of gains before falling into adjustment again, dropping from a high of $102,750 to $92,500 early this morning, a decline of 10%. This is happening despite there being no substantial negative news for the market, and the speed and extent of the drop have far exceeded most people's expectations.
As the leader of the virtual currency market, Bitcoin's crash has had a huge impact on the entire market. At the same time, mainstream virtual currencies like Ethereum and Dogecoin were also not spared, each experiencing a decline of about 15%.
Bitcoin's sharp plunge, who is the 'culprit'?
The decline in Bitcoin's price is the result of multiple factors working together. Strong economic data has weakened market expectations for interest rate cuts, and the simultaneous decline in U.S. stocks has dragged Bitcoin down through a linkage effect. A high-leverage environment has amplified market volatility, while rising government bond yields have diverted funds further. These factors have collectively shaped this round of Bitcoin price correction. However, some optimists believe that this decline is more like a healthy adjustment in a bull market, rather than a trend reversal.
Let's take a look at why everyone is concerned about $DOGE and $SHIB recently suffering such severe drops. Here comes the inside story!
These two dog-themed meme coins have recently faced a Waterloo, having just dropped 9% the day before, and on Wednesday they broke crucial support levels. On-chain data shows that the measure of trader profits and losses for Dogecoin has skyrocketed, indicating that most retail investors have made enough profit and started to sell off in large quantities.
From a technical perspective, the relative strength index (RSI) of DOGE and SHIB shows bearish signals, indicating that their downtrend is likely to continue for a while. Specifically, if DOGE continues to drop, it may fall to $0.30, while SHIB might drop to $0.000019.
It's actually not hard to understand; these Dogecoin holders see they have made a decent profit and think about cashing out quickly. With the overall market also plummeting, the selling pressure increases, and when market sentiment worsens, panic spreads, leading to even sharper declines.
Finally, a fan asked if altcoins would explode across the board?
The main reasons why the all-round surge seen in 2021 is unlikely to occur are threefold:
Continuous unlocking wave: Tokens of projects with low circulation and high FDV are continuously being unlocked, leading to heavy selling pressure.
Excessive growth on the supply side: The industry's infrastructure is further improved, the threshold for entrepreneurship is lowered, and new projects are oversaturated in issuance.
Insufficient growth on the demand side: There is a lack of attractive new business models, and most sectors struggle to achieve product-market fit, failing to stimulate demand for altcoins.
Therefore, this round of bull market will not surge across the board like in 2021. Altcoin season belongs only to certain tokens, and while finding good value and suitable targets is important, luck is also needed.
Although the market is slightly sluggish now, opportunities will come. When the time comes, I will guide everyone to aim for the lucrative opportunities in altcoins and position ourselves to buy the dips in spot trading. Like, comment, and I will help you seize great opportunities.