Bitcoin hit an all-time high above during the weekend, and the market has been waiting for a correction ever since. On Dec. 21, Bitcoin lost support at $23,000 as trading on Monday saw this long awaited correction start taking shape. The correction is happening alongside a drop in the U.S. futures in pre-market hours by around 2.5% on concerns around the new coronavirus strain in the U.K.
Data from TradingView shows that Bitcoin dropped to $22,410 and recorded a loss totaling to 3.3%. The drop is a confirmation of previous reservations from market analysts that Bitcoin was due for a retracement after a week of close to continual gains. The price is also expected to drop further to $20,000 by traders, which orderbook data thinks is the most possible formidable support level.
At the beginning of last week, Bitcoin’s price was below $19,500, a level that analysts Michael van de Poppe believes could be the new short-term price target. He further added that $22,800 was the crucial area for BTC to hold so as to preserve the prospects of a further upside.
Altcoins Affected by BTC
The market is usually affected by high price surges or dives by the top cryptocurrency. The price of Bitcoin and altcoins are related, as huge price differences from Bitcoin affects altcoins in different ways. The recent price drop is no exception, as Ethereum recorded a 6% daily dive, Litecoin was down 8.5% and ripple lost 7.4%.
The effect of Bitcoin price on altcoins is due to various factors. For instance, majority of trading in crypto is between Bitcoin ad altcoin trading pairs as most altcoins do not pair with fiat or USDT. Therefore, when BTC is stable, it is the ideal base currency for buying altcoins, which is the reason why altcoins mostly do well when Bitcoin price goes sideways.
When Bitcoin is experiencing a bullish episode, some altcoin holders dump their altcoins into BTC since they would rather make huge gains on the most traded cryptocurrency than take risks betting on small volume coins. This can affect the altcoins negatively.
When the price of Bitcoin starts falling, traders start selling their altcoins and retreat back to fiat currencies or stable coins to avoid huge losses. This could be the reason for the current fall in altcoin prices, as the uncertainty of Bitcoin price affected traders’ confidentiality in the market, making some to retreat.