Bitcoin and Ethereum fell more than 7% in one day. Is the cryptocurrency market cooling down?

On Monday, December 11, after a rebound of more than two months, the cryptocurrency market ushered in a correction. Bitcoin once fell below $41,000, reaching a low of around $40,331; Ethereum fell below $2,200, once reaching around $2,163. As of the time of writing, Bitcoin is trading at $40,758, down 7% in 24 hours. Earlier on Monday, as Bitcoin plummeted to below $43,000, $330 million of cryptocurrency futures contracts in the market were liquidated. According to CoinGlass data, the current total liquidation amount has now reached $516 million, most of which are long positions.

But this pullback is relatively "normal." Bitcoin is still up 5% from the beginning of the month, when it was trading at $38,688. Similarly, Ethereum is currently priced at $2,185, but this is still 7% higher than the price at the beginning of the month. The total market value of the entire cryptocurrency market has remained around $1 trillion for most of the year and is currently at $1.6 trillion, down 6% from the day before.

Compared with Bitcoin and Ethereum, the price correction faced by most other Altcoins this time is more brutal. For example, Ordinals, the leader of the inscription track, has experienced exponential growth in the past half month, and its price once reached around $68.37. However, on Monday, the token fell by as much as 14%, and its current price is $45.11. The price of Pepe, a meme coin that was popular at the beginning of this year, has recently risen by 26%, but then experienced a decline. As of press time, the token has fallen by 13% in 24 hours and its current price is $0.00000138.

Although the entire market is in a correction, some Altcoins are rising against the trend due to various positive news. According to a recent report by digital asset management company CoinShares, institutional investors have shown strong interest in Solana and Avalanche, with more than $5 million flowing into ETP products linked to these two tokens in the past 7 days. At the same time, most tokens related to blockchain games fell on Monday, but Immutable rose 10%. However, the stablecoin BUSD, which is pegged to the US dollar, decoupled on Monday. According to Coingecko's monitoring data, as of press time, BUSD has fallen to $0.97. Although it has been discontinued and will be completely offline in 2024, there are still about 1.4 billion tokens in circulation in the market.

According to an article on Binance's official website, one possible reason for the BUSD price depegging is that December 11 is the time when BUSD margin trading and futures trading on the Binance platform are automatically closed. The price of BUSD has continued to fall since the U.S. Securities and Exchange Commission (SEC) issued an execution order to New York-based Paxos, which provides minting services for BUSD tokens. Both Paxos and Binance have assured users that they can still redeem the tokens until February 2024. Binance said that before the platform ends support for BUSD, any unredeemed BUSD tokens will be automatically converted to FDUSD, a U.S. dollar stablecoin issued by FD121.