Why Crypto is Down Today? Bitcoin Dominance Strengthens Amid Market Selloff

Crypto Market Experiences Sharp Decline Amidst Profit-Taking and Market Correction

Following a surge in value experienced by major altcoins after Bitcoin's recent spike above $89k, the cryptocurrency market has undergone a significant correction within the past 24 hours. Bitcoin's price dipped below $85.2k on Tuesday, causing the total market capitalization of cryptocurrencies to decrease by 3% to approximately $3.06 trillion during the early Asian session on Wednesday, November 13.

Given the consensus that the broader crypto bull market is nearing its peak, it is advisable for traders to manage their risk accordingly and anticipate potential dips of 20-40%.

Factors Contributing to the Crypto Selloff

Leveraged Market Correction

Over $2 billion worth of forced liquidations have occurred in the cryptocurrency market within the past three days. During the last 24 hours, approximately $928 million of these liquidations have impacted long-position traders amidst heightened volatility.

As a result, the initial short squeeze has subsided significantly, with more traders opting for short-term corrections. On the Binance exchange, over 51% of leveraged traders hold short positions, indicating diminished optimism for a sustained market rally in the near future.

Shift in Market Sentiment

Initially, the victory of Donald Trump in the United States triggered a surge in Bitcoin's price, leading to a decline in fears of a crypto market capitulation. Subsequently, the Fear and Greed Index for Bitcoin and Ethereum surpassed 80%, reflecting excessive optimism within the market.

Furthermore, US spot Bitcoin ETFs have experienced significant inflows of over $8.7 billion in the past four weeks. MicroStrategy recently announced a $2 billion purchase of Bitcoins, aiming to acquire a total of $42 billion worth.

However, historical data indicates that the crypto market frequently experiences corrections when bullish sentiment reaches extreme levels.

Midterm Expectations

Bitcoin

Historical trends suggest that Bitcoin's dominance over altcoins will continue until early January 2025. Its support range is anticipated to be between $83,250 and $85,800, where a significant number of addresses have acquired Bitcoin.

Altcoins

The altcoin market is expected to gain momentum following the recent bullish breakouts experienced by Dogecoin (DOGE), Solana (SOL), and Ethereum (ETH).