Experts explain the reasons for the correction and see opportunities for altcoins

On December 11, Bitcoin fell below the $42,000, sliding about 7%. Analysts cited the release of US macro data and prepared for a possible continuation of the drop.

What preceded the correction

Since early October, digital gold has risen more than 70%, and many in the crypto community had warned of an imminent slowdown in the rally.

Even before the volatility began, DecenTrader noticed a rapid rise in funding rates — a classic signal of looming instability.

#bitcoin funding rates were flat during the move up to $44k, but are now climbing rapidly as price goes sideways ? pic.twitter.com/QzjDKBA1K4

— Decentrader (@decentrader) December 11, 2023

«Let’s just be clear: this year we’ve grown a lot… (from $16,000), and a correction is expected. I really like this development, so this is definitely not a call to buy. It would be nice to have a deep correction caused by FUD, and it is overdue,” said on December 9 by the head of DecenTrader under the nickname FibFilb.

However, he noted that the probability of a drop to $25,000 is “very low,” and for that to happen, “some global catastrophe” would have to occur.

The crypto trader known as BitQua also expected a possible correction, but still sticks to a forecast of $48,000 by the end of December.

The daily and weekly close was at $43,792. Pullbacks are normal and even healthy. Hourly fluctuations mean nothing. This project is for the week. #Bitcoin https://t.co/1XujRIX17p

— BitQuant (@BitQua) December 11, 2023

«A pullback is normal and even healthy. Hourly fluctuations mean nothing,” he emphasised.

Co-founder of MN Trading Michaël van de Poppe urged the community not to worry. He said corrections occur, and especially deep ones happen in illiquid altcoin markets.

Markets do have corrections and with #Altcoins, they’ll be deep as markets are illiquid.

Don’t stress out. #Bitcoin momentum is slowly getting towards the end, through which #Ethereum is easily going to take over next quarter.

— Michaël van de Poppe (@CryptoMichNL) December 11, 2023

«Bitcoin momentum is gradually moving toward the end, and Ethereum will easily take the lead in the next quarter,” he added.

After a brief drop to $40,400, a wave of liquidations swept the market. According to Coinglass, $400 million worth of positions were forcibly liquidated in the past 24 hours, of which $344 million were longs.

Causes of the pullback

According to the remarks by Greta Yuan, head of research at VDX, the correction occurred as nonfarm payrolls and the unemployment rate in the US came in higher than expected.

«The strengthening of the labor market has somewhat dimmed the hopes for a Fed cut early next year. Gold prices also fell as the US dollar index rose,” she clarified.

Additionally, MetAlpha believes that the CPI release scheduled for this week and the Fed meeting potentially could lead to further corrections.

Analyst Willy Woo allowed for Bitcoin to fall further to $39,700.

The #Bitcoin CME Gap at 39.7k…

By my count 28 out of 30 gaps have been filled on CME daily candles (93%). The other unfilled gap is pictured in the lower left of this chart also. pic.twitter.com/EyccaJTTkr

— Willy Woo (@woonomic) December 7, 2023

He pointed to a price gap at this level formed on the daily Bitcoin futures candle on the Chicago Mercantile Exchange. In his view, such gaps have historically been filled, and the price tends to return to that level.

Crypto analyst and co-founder of Reflexivity Research Will Clemente said that the correction and volatility purge “the market of weak hands,” and that the reduction in leveraged funds frees room for further growth.

BTC just ~doubled in 2 months with no pull backs, a correction is not that surprising.

Corrections shake out “weak hands” and leverage, allowing for a stronger foundation for eventual moves higher.

Bitcoin’s volatility is a feature, not a bug.

Chill with the leverage ? https://t.co/BdvvS8KDZU

— Will (@WClementeIII) December 11, 2023

Crypto trader RamenPanda saw signs of an altseason in the recent price dump. He added that Bitcoin will need a long period to resume its uptrend, as the asset’s dominance has peaked.

I told you about flash dumps repeatedly

Now dump is completed

It will take a long period of chops for Bitcoin to resume uptrend

Bitcoin dominance topped

We now entering proper ALT SEASON

BE POSITIONED

Tears of regret don’t taste great

— RamenPanda (@IamRamenPanda) December 11, 2023

Earlier, industry veteran and Blockstream CEO Adam Back predicted Bitcoin to reach $100,000 ahead of the upcoming April 2024 halving.

Recall that CryptoQuant experts allowed for a break above the $50,000 level in early 2024.