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Bitcoin’s brief but sharp tumble toward $40,000, accompanied by a broader selloff in the crypto market, signals a potential deleveraging phenomenon rather than a fundamental news catalyst.&nbsp; 
On Monday, the largest cryptocurrency plunged as much as 7.5% to $40,521 before recovering some losses to trade 3.7% lower at $42,165 at the time of writing.&nbsp; 
The downward trend extended to smaller tokens such as <a href="https://cryptonews.com/coins/ethereum/">Ethereum (ETH)</a>, <a href="https://cryptonews.com/coins/ripple/">XRP (XRP)</a>, Polkadot, and <a href="https://cryptonews.com/coins/cardano/">Cardano (ADA)</a>, all of which witnessed declines.&nbsp; 
The top 100 digital assets, as measured by an index, dropped approximately 4%, marking the most significant decline since November 22. 
<a href="https://cryptonews.com/coins/bitcoin/">Bitcoin (BTC)</a> has been on a remarkable rally this year, driven by expectations of regulatory approval for the first US exchange-traded funds directly investing in the cryptocurrency.&nbsp; 
This anticipation has expanded the potential investor base for cryptocurrencies.&nbsp; 
Additionally, bets on the Federal Reserve cutting interest rates in 2024 have further fueled the rally in Bitcoin and the broader virtual currency market. 
Richard Galvin, co-founder at Digital Asset Capital Management in Sydney, highlighted the substantial rise in market leverage, attributing the recent fall to a market deleveraging rather than any specific fundamental news catalyst.&nbsp; 
“The current fall looks like a market deleveraging as opposed to any fundamental news catalyst.” 
<h2 id="around-300-million-worth-of-positions-liquidated">Around $300 Million Worth of Positions Liquidated</h2> 
 Coinglass data shows that approximately $299 million worth of crypto trading positions, betting on higher prices, were liquidated on December 11, marking the highest tally since mid-September. 
As investors brace themselves for US inflation data and the Federal Reserve’s final policy meeting of 2023, there is a sense of caution surrounding aggressive wagers on rate cuts.&nbsp; 
Global stocks and US equity futures displayed wavering trends as the dollar gauge ticked up, reflecting a cautious sentiment among investors. 
Market analyst Tony Sycamore from IG Australia Pty noted that traders usually take profits during this period and expects the price declines towards the $37,500 to $40,000 range to be well-supported by dip buyers. 
Although Bitcoin has surged over 150% year-to-date, contributing to the broader recovery in digital asset prices after a significant downturn in 2022, the token remains far below its pandemic-era record of nearly $69,000 set just over two years ago.&nbsp; 
<h2 id="bitcoin-s-rally-shows-low-correlation-with-traditional-assets">Bitcoin’s Rally Shows Low Correlation With Traditional Assets</h2> 
 Bitcoin has displayed resilience by surging to a more than 19-month high, even as global markets experienced a downturn.&nbsp; 
The cryptocurrency has gained more than 14% over the past month.&nbsp; 
In contrast, global shares and bonds have been struggling with losses since the beginning of the week.&nbsp; 
This&nbsp;<a class="editor-rtfLink" href="https://cryptonews.com/news/bitcoins-recent-rally-underscores-the-low-correlation-of-crypto-with-traditional-assets-expert.htm" target="_blank" rel="noopener">divergence highlights</a>&nbsp;the current low correlation between cryptocurrencies and other traditional macro assets, Sean Farrell, the head of digital-asset strategy at Fundstrat Global Advisors LLC, said. 
Throughout 2023, Bitcoin’s correlations with stocks and gold have diminished as specific factors within the crypto market propelled a remarkable 152% surge in the value of the largest digital asset.&nbsp; 
One of the key drivers behind the gains is the anticipation that the United States will approve its first spot Bitcoin exchange-traded funds (ETFs), potentially expanding the demand for the token.

Market Dip Indicates Deleveraging Rather than Fundamental News: Crypto Analyst

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