Bitcoin Plunged To Near $40K Before Pullback, Is Correction to $39,000 Likely?
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Bitcoin Plunged To Near $40K Before Pullback, Is Correction to $39,000 Likely?

Bitcoin (BTC) over the past roughly 24 hours has suffered its steepest daily drawdown, near $40k, in almost four months in a massive leverage wipe-out as traders were reminded of the crypto’s occasional steep bull market corrections.

Over the space of a few minutes Sunday evening, BTC plunged to near $40,300 from around $43,800 in what could be termed a “flash crash.” 

Prices quickly recovered to $42,400, but then started to slide again during US afternoon hours to as low as $40,200, a level it broke through on the way up a week ago.

At press time, the largest crypto had bounced back above $41,000, still down nearly 7% over the past 24 hours, but on track to be the worst daily drawdown since BTC’s drop below $25,000 on August 17.

See Also: XRP Fell More Than 7% In 24 hours Before Rising Back

Is Correction to $39,000 Likely?

Sharp drawdowns have been part of every previous bitcoin bull cycle but have been elusive in the past weeks as BTC rose nearly without pause from $27,000 to nearly $45,000 since Oct. 1.

The current correction shouldn’t have come as a surprise and was due to happen at some point, bitcoin-focused market analyst Will Clemente said. 

These pullbacks are necessary to unwind excessive leverage for a more sustainable price action, he added.

“BTC just nearly doubled in 2 months with no pullbacks, a correction is not that surprising,” Clemente posted. “Corrections shake out ‘weak hands’ and leverage, allowing for a stronger foundation for eventual moves higher.”

The decline wiped out over $520 million in leveraged trading positions on the crypto derivatives market, predominantly longs betting on rising prices, CoinGlass data shows. It was the largest level of daily liquidations in at least three months, according to the firm.

See Also: Dogecoin Decreased More Than 8% Within 24 hours

On-chain analyst Willy Woo says he’s anticipating Bitcoin (BTC) will retest the $39,000 zone before any potential bullish continuation.

Woo tells his one million followers on the social media platform X that Bitcoin has a gap near $39,700 on the Chicago Mercantile Exchange (CME) futures market.

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