The cryptocurrency market, fueled by the recent election excitement, took a breather on Tuesday after a fiery run-up. While Bitcoin briefly hit a record-breaking $90,000, it quickly retreated under selling pressure. Ethereum, too, displayed volatile behavior, soaring to a new high of $3,400 (a level not seen since July) before settling below $3,300. Meanwhile, Dogecoin continued its upward trajectory, boosted by President-elect Donald Trump’s appointment of Elon Musk and Vivek Ramaswamy to lead the Department of Government Efficiency (DOGE).
This sudden halt in the rally took a toll on bullish leveraged traders, resulting in a wipeout of almost $550 million in long positions within the past 24 hours. Funding rates across major exchanges dropped sharply, indicating a cooling-down market, even though long-position traders remain dominant. The “Extreme Greed” sentiment continued to intensify, as reflected in the Cryptocurrency Fear and Greed Index, which climbed from 80 to 84.
While the top cryptocurrencies showed signs of correction, other coins experienced impressive gains. Bonk (BONK) surged by 42.44%, Stellar (XLM) climbed by 19.95%, and Floki (FLOKI) rose by 19.01%. The global cryptocurrency market capitalization reached $2.95 trillion, marking a modest increase of 0.26% in the last 24 hours.
The stock market also took a break from its election rally, mirroring the cryptocurrency market’s sentiment. The Dow Jones Industrial Average plunged 382.15 points (0.86%) to close at 43,910.98. The S&P 500 lost 0.29%, closing at 5,983.99, while the tech-focused Nasdaq Composite dropped 0.09% to close at 19,298.76. The pullback followed three consecutive record highs on Monday, driven by the election outcome. Investors are now likely to shift their focus to key inflation numbers due this week, including the Consumer Price Index (CPI) slated for Wednesday and the Producer Price Index (PPI) for Thursday.
Despite the recent correction, analysts remain optimistic about the future of the cryptocurrency market. Arthur Azizov, CEO of B2BINPAY, a cryptocurrency payment provider, noted that the 32% increase over the past week warranted a healthy retracement, likely around 50% of the upward move, to prevent a full reversion to the previous range. He expressed confidence in Bitcoin’s continued growth, citing broader investor enthusiasm, interest in exchange-traded funds, and the incoming administration’s favorable economic policies.
Renowned cryptocurrency analyst Michaël van de Poppe characterized Bitcoin’s minor correction as a normal consequence of the market’s volatility. He encouraged his followers to buy the dips and hold onto their altcoins, emphasizing that the rewards will eventually materialize. The market’s recent volatility provides opportunities for astute investors to capitalize on dips and potentially reap significant rewards in the long term.
This brief correction in the cryptocurrency market, while notable, does not necessarily signify a major shift in the overall trend. As analysts continue to predict further growth in the long term, this cooldown presents a potential buying opportunity for those seeking to invest in the burgeoning world of digital assets.
