Crypto market correction: Panic or Opportunity?

Liquidation is above $400 million as Bitcoin loses its charm. It has been termed a price correction, with a hint that it was expected to happen ahead of Halving. BTC and ETH are down significantly from their recent ATH, sending signals that bears are running open and could walk for a few more miles. 

More specifically, Bitcoin is down by 0.95% and Ethereum has lost 1.93% in the last 24 hours. Altcoins have followed the trend as the community expects a surge for a new peak.

Factors contributing to the correction

A total of three factors have been pinned to the board, pointing out that they are contributing to the ongoing price correction. These are institutional outflows, shifting market sentiments, and funding rate dynamics.

Institutional outflows

Grayscale Bitcoin Trust started registering outflows when the SEC approved applications for the Spot Bitcoin ETF. It triggered a sentiment of price fall that later retraced to an uptick. However, outflows prevail amid the rising accumulation by the likes of BlackRock and MicroStrategy.

Shifting market sentiment

The positive manufacturing data was unexpected. Nevertheless, it has sparked hopes that the June Fed rate cut is 50% less likely to happen. Altcoins are under the grip of selling pressure after attaining an ATH and gaining traction for long-term profits. Needless to say, a portion is holding on to its well-adjusted portfolio filled with altcoins. The dollar index surpassing 105 is furthering the worry that crypto assets are expected to be bought.

Funding rate dynamics

A negative funding rate instills a sense of a downward trend waiting ahead. The current trend shows that the rate is high, with traders willing to pay a premium to hold long positions. Whales may cause sell-offs and cascading liquidations.

Historical context: Bitcoin Halving

There are two historical contexts for Bitcoin Halving. They are in two phases: pre-halving and post-halving. Pre-halving has a historical context of price correction. Meaning, the price falls before it can surge again. Post-halving has a historical context of pulling the price for an upward trajectory. Thereby causing a surge in the price.

While a clear timeline is hard to define amid volatility, it is right to assume that these events are certain to happen, as evident from the fact that prices are already down ahead of Halving, which is likely to happen before April 20, 2024.

Bitcoin is currently trading around $66,000, down from the recent ATH of ~$73,000. BTC predictions estimate that the token will end in 2024 at as high as $100,000, or $150,000.

Investment considerations

Crypto investment has to be done only after thorough research. Plus, risk assessment is imperative to know how much funds can be diverted to a scenario that is likely to drain a major part of it. The current dip is technically an ideal situation for purchase. But the price may go further down. Alternatively, there is a chance that it is the least it will hit.

Simply put, invest in crypto if risk assessment and fund allocation give a green light. Look for ongoing trends and discussions on exchange platforms and/or authentic forums for better clarity of thought.

Conclusion

The crypto sphere is falling at the moment. SOL, ETH, and DOGE are tokens, other than BTC, that are slipping way past their recent ATH. Institutional outflows, shifting market sentiments, and funding rate dynamics contribute to the price change. Historical context does offer support for price clarification as a possible trend. Research and risk assessment are imperative at every step in the crypto market.

Trevor Holman

Trevor Holman follows crypto industry since 2011. He joined CryptoNewsZ as a news writer and he provides technical analysis pieces and current market data. He is also an avid trader. In his free time, he loves to explore unexplored places.

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