BlockBeats News, around 10:00 on December 11th, Bitcoin fell below $42,000, briefly touching $40,400, with a 24-hour decline expanding to 4.79%, and is now priced at $42,343. Ethereum briefly fell below $2,200 and is now priced at $2,213, with a 24-hour decline of 5.9%. Mainstream tokens such as SOL and XRP also experienced certain declines.

According to Coinglass data, as of the time of writing, the total liquidation in the past hour was $389 million USD, of which long positions accounted for $340 million USD and short positions accounted for only $48.9295 million USD.

What are the reasons for the decline?

One of the most frequently asked questions in the encryption community is "Why is it falling?" after a single needle drop.

Macro Level

Previously, due to the expectation of a Bitcoin spot ETF, the market was generally optimistic about the December market. However, Bitcoin erased nearly a week's gains in 20 minutes. From a macro perspective, it still has a strong correlation with the US economic cycle.

The seasonally adjusted CPI for November in the United States will be released at 21:30 on December 12th, with a previous value of 3.2%. Additionally, the Federal Reserve will announce the interest rate decision for the United States up to December 13th at 03:00 on December 14th. Half an hour after the interest rate decision is announced, Federal Reserve Chairman Powell will hold a monetary policy press conference.

This week's release of US inflation data and the final policy meeting of the Federal Reserve in 2023 may keep the price volatility of cryptocurrencies at a high level.

Market Behavior

On a specific market behavior level, on X, on Thursday last week, on-chain analyst Willy Woo wrote that due to the need to fill the gap, the price of Bitcoin may pull back to $39,700.

Recently, the market leverage ratio has risen sharply. According to Coinglass data, the current open interest of Bitcoin futures contracts on CME (Chicago Mercantile Exchange) has surpassed all cryptocurrency CEX platforms, ranking first among all platforms since March 2021. As of the time of writing, the open interest of Bitcoin futures contracts on CME platform is 120,500 BTC, worth 5.09 billion US dollars. The second-ranked Binance has an open interest of 99,200 BTC, worth 4.196 billion US dollars.

The co-founder of the digital asset capital management company, Richard Galvin, believes that "the current decline seems to be a market deleveraging, rather than any fundamental news catalyst."

Market analyst Tony Sycamore said, "It makes sense to see some profit-taking." He expects the Bitcoin price to fall to the range of $40,000 to $37,500, which will be strongly supported by "bottom-fishing" buyers.

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