Over the past 24 hours, the crypto market saw more than $1.7 billion in positions liquidated, marking the largest liquidation event since 2021. More than 560,000 traders were affected. Bitcoin, which dropped to $94,000, was the main catalyst for these massive liquidations.
Why the Market Fell
An hour before the wave of liquidations, active selling was observed on the Coinbase exchange. Experts say this created market pressure, pushing Bitcoin’s price toward critical levels where cascading liquidations began. Market makers noted significant strain in orders. Meanwhile, the Fear & Greed Index remained at 78, indicating extreme greed among market participants.
Overheating of the Market
A sharp increase in the funding rate (Funding Fee) and open interest (OI) over the past few days indicated the market was highly leveraged. This overheating set the stage for heightened volatility, ultimately resulting in the current correction.
Market Reaction
Bitcoin dropped to $94,000 but soon began to recover. At the time of writing, the asset is trading confidently at $97,500. Previously, South Korea’s state of emergency had impacted Bitcoin’s price, causing it to abruptly dip to $89,500 before quickly rebounding. On December 5, Bitcoin surpassed the $100,000 mark for the first time in history.
Experts note that Ethereum was hit slightly harder. Immediately after the drop, large players took notice and began buying up ETH in bulk. The price has not fully recovered yet. During its peak the previous day, ETH traded above $4,000, but now it stands at around $3,700.
Amid the overall decline, XRP also came under pressure from large sell orders, causing its price to fall by more than 5%.
In contrast to the broader market trend, some memecoins showed impressive growth. PEP soared by more than 100% in 24 hours, while BABYDOGE gained 35%. Total trading volume for memecoins reached $32 billion, standing out against the market’s 2.3% downturn.
Among the top 10 cryptocurrencies by market capitalization, Cardano (ADA) suffered the most. Its price fell by 10.24% in the past 24 hours to $1.02. During the drop, analysts observed increased activity in trading pairs involving USDC, FDUSD, and ADA.
Despite high market capitalizations, experts believe liquidity remains limited. This explains the rapid price rebounds following sharp drops, as players strive to take advantage of the lower prices for buying assets.
This post is for informational purposes only and is not an ad or investment advice. Please do your own research making any decisions.
