Bitcoin’s Sudden 7.6% Plunge: What’s Behind the Correction?

The recent decline of Bitcoin to 7.6% from its previous peak of almost $100,000 on November 22 has sent shockwaves through the cryptocurrency market. This significant correction has left many investors and analysts wondering what’s behind the sudden drop. Long-term holders (LTHs), often referred to as “smart money,” have played a major role in this correction, selling 3.85% of their holdings since September.

Historically, Bitcoin has experienced corrections of 20-30% to combat excessive leverage. However, the severity of the current correction may be unwarranted, considering the rapid increase in value. Unprecedented profit-taking on November 21, according to Glassnode data, has contributed to the current downturn.

LTHs, who tend to possess superior judgment regarding market cycles and sentiment, have been selling their holdings at an alarming rate. Since September, they have sold 549,119 BTC, equivalent to 3.85% of their holdings. This sell-off, which started in October, has gained momentum, exceeding the buying activity of major investors like MicroStrategy and U.S. spot-listed ETFs.

The impact of LTHs on the market is undeniable. Their actions often reflect a more comprehensive perspective for the wider market. The fact that they have sold a significant amount of their holdings suggests that perhaps they are taking profits and possibly preparing for reversing the current market trend.

This correction is not unprecedented, with similarities drawn to past downturns. In 2017, Bitcoin experienced a 0.53% correction, and in 2021, it corrected by 13.5%. This year, Bitcoin experienced a 6.51% correction earlier in 2024. While the current 3.85% decrease is a small amount, its abrupt and significant drop has surprised many.

As the market adapts to this new reality, investors are left wondering what will occur in the near future. Will Bitcoin’s price be impacted by long-term holders, profit-seekers, and other market participants, leading to a sudden correction in its price? Read more about Bitcoin’s market trends and insights in our article, “Bitcoin’s Volatility: What’s Driving the Price Swings?” on CoinSeeks.com Learn more.

The current market sentiment has been influenced by the sell-off of long-term holders, record-breaking profit-taking, and sudden correction. Given the evolving nature of the market, it is crucial to remain up-to-date and adapt to changes as necessary. Despite the sudden correction, many investors are taking this as hardly an anomaly, and the market will likely continue to adjust to the new reality.