The crypto market faced a significant shake-up as over $1 billion was liquidated in the past 24 hours, catching traders off guard. According to CoinGlass data, $856.7 million of these liquidations came from long positions, driven by the strong bullish momentum observed over the last month.
Bitcoin slipped by 5% and is now trading at $96,350, as reported by CoinMarketCap.
This downturn follows a pattern seen earlier this month, with Bitcoin’s dips below psychological levels triggering large-scale liquidations. On Dec. 5, a sharp 5.47% drop below $93,000 erased $300 million within minutes. A similar scenario unfolded on Dec. 10, when a crypto market pullback wiped out $1.7 billion in leveraged positions, marking the largest long liquidation of this cycle so far.
Short-Term Volatility or a Bigger Trend?
Swyftx lead analyst Pav Hundal attributed the sell-off to market unpreparedness for negative news amidst a month of bullish sentiment. “The market wasn’t braced for bad news, leading to indiscriminate selling. However, this seems like short-term angst rather than a prolonged downturn,” he stated.
Other analysts echo this optimism. Real Vision’s chief crypto analyst Jamie Coutts hinted at a potential buying opportunity on the horizon. Similarly, Caleb Franzen, another prominent crypto analyst, contextualized the volatility as a natural occurrence during bull runs. Franzen pointed out that during the last bull cycle, Bitcoin experienced nine pullbacks over 16 months, all of which eventually gave way to higher highs.
Fred Krueger, a Bitcoin maximalist, cautioned against using leverage in trading Bitcoin, highlighting it as a key factor in recent liquidations. Meanwhile, Hundal believes the crypto market’s next moves will hinge on expectations for the incoming Trump administration, which could bring significant changes to U.S. crypto policy.
Crypto Santa Rally Still Possible?
Despite the market turbulence, analysts remain hopeful for a “Santa rally” leading into the holiday season. Hundal stated that market participants should brace for volatility as the January 2025 inauguration of President Donald Trump approaches, with speculation around his plans for a U.S. Bitcoin strategic reserve fueling market dynamics.
For now, the crypto market sits at a crossroads, balancing between short-term uncertainties and long-term bullish prospects.
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