On Wednesday afternoon, January 3rd, the crypto world experienced an unexpected shock. The price of Bitcoin, the leading cryptocurrency, plunged over 7% in a matter of minutes, falling below the critical $42,000 mark. This dramatic price drop not only interrupted Bitcoin’s recent bull run, but also wiped out last week’s gains in a very short time.
If you want to read more about the crash of the price of Bitcoin and to be the first to find the most important financial news of the day, download for free our companion app Born2Invest, available for free for both Android and iOS devices.
Crash Data Analysis
According to CoinGecko, the price of Bitcoin fell 7.3% in the last 24 hours, at one point falling as low as $41,804. This sudden downward move resulted in the liquidation of over $550 million worth of crypto long positions, with $104 million worth of Bitcoin longs liquidated in the last hour alone.
Impact on other cryptocurrencies
Bitcoin’s crash also dragged down other leading cryptocurrencies. Ethereum, the second largest cryptocurrency, saw a decline of 8.8%, while Solana fell over 15%. Also affected were XRP, Cardano and Avalanche, which fell by over 10%, 14% and 15% respectively.
Background to the price of Bitcoin fall
This price drop comes at a critical time as the crypto market eagerly awaits the US Securities and Exchange Commission’s decision on whether it will approve multiple applications for spot Bitcoin ETFs in the coming days. Some analysts speculate that the decision could trigger a “sell-the-news” event.
Markus Thielen, an analyst at Matrixport, argued in a research note that the SEC is likely to reject all applications for a spot Bitcoin ETF in January. This contrasts with the optimistic outlook from analysts at Bloomberg Intelligence and JP Morgan.
The sudden collapse in Bitcoin price is a clear sign of the volatility and unpredictability of the crypto market. While some investors and analysts remain optimistic about the long-term future of Bitcoin and other cryptocurrencies, this incident reminds investors that high risks and uncertainties still prevail.
With the SEC’s impending decision on Bitcoin ETFs, the market could experience further turbulence, highlighting the need for careful risk assessment and strategic planning for crypto investors.
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First published in BLOCK-BUILDERS.DE. A third-party contributor translated and adapted the articles from the originals. In case of discrepancy, the originals will prevail.
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