The thing about digital assets is that they can be more volatile than traditional financial instruments, and this was made clear when Bitcoin briefly fell by 7.5% during a broad-ranging selloff that occurred on Monday, December 11th.

The world’s largest cryptocurrency token saw its value plummet to $40,521 in early trading but managed to bounce back by around 7:15 AM London time. As of press time, Bitcoin was trading at $42,245 a token, 3.6% lower than it was over the weekend.

Experts feel that this slight drop may be construed as deleveraging in the market, rather than a drop propelled by adverse events. Indeed, as of morning trading, around $312 million in crypto trading positions that bet on higher prices were liquidated during the session, the highest since September of this year.

Year-to-date, Bitcoin’s value has risen by over 150%. The token’s jump has energized the digital asset sector following its dismal $1.5 trillion plunge in the past year. However, Bitcoin is still a good deal lower than the record-breaking $69,000 seen back in 2021.

What Now?

This recent drop in value is seen as a sign that Bitcoin’s most recent rally is not all that it seems. The token has had quite a year, especially in light of the possibility that regulatory agencies are set to approve the direct investment of US exchange-traded funds into Bitcoin. This is expected to expand possibilities for those investing in digital assets. 

Likewise, the possibility of interest rates getting slashed to more reasonable limits by the Federal Reserve early next year has also fueled the Bitcoin rally, as well as those for several other cryptos in recent weeks.

For now, however, investors and market watchers alike are focused on how the Federal Reserve’s last policy meeting for the year which closes on Wednesday, December 13th will impact any bets made on the possibility of rate cuts occurring as early as the first quarter of next year.