- A crypto expert has stated that the retreat of Bitcoin (possibly down to $40,000) may not be a bad thing.
- Clemente argued that this correction is necessary as it will shake out ‘weak hands’ and eliminate leverage, ultimately building a stronger foundation for higher moves.
- Meanwhile, those on the sidelines might be taking a breath from Bitcoin to see the results of macroeconomic events that occurred this week.
The recent sharp drop in Bitcoin’s price may not be creating a negative situation; according to the expert analyst, what does this situation signify?
About Bitcoin’s Drop to $40,000
A crypto expert has stated that the retracement of Bitcoin (possibly down to $40,000) may not be a bad thing. This perspective emerged during a period when concerns about losing all the recent gains of the leading cryptocurrency became more pronounced.
William Clemente, founder and partner of Reflexivity Research, argued that this correction is necessary as it would shake out “weak hands” and eliminate leverage, ultimately forming a stronger foundation for higher moves. He also emphasized that the volatility of Bitcoin is “not a bug but a feature.”
He made this statement based on the claim that Bitcoin doubled in the last two months without experiencing any correction. While Bitcoin may not have exactly doubled, it has seen a significant increase in the past few months. This speculation is based on the possibility of the Securities and Exchange Commission (SEC) approving pending Spot BTC ETF applications.
This impressive rally has indeed occurred, and the leading cryptocurrency has almost experienced no correction. Bulls have remained in tight control, and many have continued to endure painful liquidations. However, like any asset, a correction is always expected, and it could happen right now.
BTC Correction is Already Happening
Bitcoin is already facing a correction, with more long positions liquidating in the last 24 hours, according to Coinglass data. In a previous tweet, Clemente warned that there would be sharp corrections on the way while the market is shaking off “greedy leveraged longs.”
Meanwhile, the reason for Bitcoin taking a breather could be those waiting on the sidelines to see the outcomes of macroeconomic events happening this week. This includes the Consumer Price Index (CPI) inflation data to be released on December 12, the FOMC meeting on the same day, and December 13.
Many are hopeful that the outcomes of these events will be quite positive, as it could further fuel the prevailing bullish sentiment across the crypto community. Regardless, this sentiment seems unlikely to diminish as many are already looking towards January, as it could be a period where the Spot Bitcoin ETF might get approved.
Liquidity is also flowing into the ecosystem, and digital asset investment products are experiencing their 11th week of inflows, totaling $43 million. Bitcoin remains the focus for these investors, as the leading cryptocurrency sees an inflow of $20 million.
