What to know:
- Bitcoin’s retreat from its peak at $118,000 led to over $1 billion in liquidations across the crypto market.
- Analysts interpret the sell-off as a healthy profit-taking phase, supporting the overall bullish trend by hopes of Fed rate cuts and ETF inflows.
- While rising core inflation and high valuations present risks, demand for cryptocurrency from institutions remains robust.
Crypto prices dipped recently in reaction to an unexpected rise in the Producer Price Index (PPI) inflation. However, experts assert that this is merely a correction within a wider bullish trend.
“The pullback is, in my view, simply a recalibration in an otherwise bullish trend,” said David Siemer, co-founder and CEO of Wave Digital Assets.
Translation: Siemer believes this downturn is a natural adjustment rather than a shift in market direction.
The recent surge in Bitcoin to over $124,000 was spurred by growing expectations for interest rate cuts from the Federal Reserve, coupled with a significant influx of ETF investments.
Kruger notes that profit-taking following impressive gains was expected, and overall market sentiment remains optimistic with support for any dips.
This shakeout triggered record liquidations, indicating that many leveraged positions, especially long bets, were forcibly closed. CoinGlass data shows that these liquidations represent the largest of their kind since early August.
Crypto liquidations
“It’s a healthy consolidation rather than a reversal,” concluded Siemer.
As analysts continue to monitor the market for potential risks like valuation overstretching or geopolitical tensions, the outlook remains promising despite recent fluctuations.
