With Bitcoin (BTC) prices stabilizing recently, some analysts are still warning of a potential flash crash in the cryptocurrency market as part of a sharp correction that could lead to massive liquidations. After the market made huge gains over the past month, due to record high volumes of open leveraged derivatives contracts.
On the other hand, analysts believe that such corrections could be an opportunity to buy digital currencies. One of them described it as a “blessing” that should be taken advantage of.
CoinGlass data indicates that the volume of open interest in Bitcoin futures contracts has decreased from $64 billion to $58 billion, a 9% decrease since last week.
However, the open interest to USDT reserve ratio for Bitcoin is still very high, indicating that the Bitcoin futures market is still heavily leveraged despite the recent decline.
This is a rather dangerous situation, as high leverage can lead to rapid liquidation if the market comes under any additional selling pressure.
The charts indicate that open interest is still above the historical levels recorded in March 2024. This means that the market may be preparing for a sharp decline in the event of a correction.
Cryptocurrency liquidation volumes surge after South Korea declares state of emergency
Leveraged Open Deals Clearance Map in Cryptocurrency MarketIn the past 24 hours, about $590 million was completely liquidated from the market after South Korean President Yoon Suk-yeol declared a state of emergency, which he later retracted.
Within this liquidation, there were $86 million in liquidations in Bitcoin (BTC) trades and $57 million in Ethereum (ETH) trades, according to CoinGlass data.
This liquidation comes in the context of an increase in trading volume and open interest. The market has witnessed increased interest from traders, especially after the emergency announcement in South Korea.
This indicates how much political news affects digital markets, as any unexpected announcement can lead to massive liquidation that affects cryptocurrency values and increases volatility.
The events come a day after 10x Research announced on December 3 that the daily trading volume of digital assets in South Korea had reached $18 billion, exceeding the trading volume of the financial market by 22%.
The rise indicates a growing interest in cryptocurrencies among individual investors in South Korea, reflecting a shift in market sentiment toward digital assets rather than traditional investments.
Bitcoin Whales Waiting for Opportunity Strategy
For his part, analyst Onat Tütüncüler said on the CryptoQuant forum that the influx of Bitcoin to exchanges indicates a possible sell-off in the future, but currently there is no direct selling pressure.
“These moves should be closely watched to predict any potential impact on the market,” Tutkuler said, noting that the aSOPR index is not yet showing any significant profit-taking activity.
This strategy suggests that Bitcoin whales are adopting a wait-and-see approach, meaning there is a tendency to maintain holdings for now rather than selling immediately.
This approach comes in the context of some analysts’ expectations that the market may face severe fluctuations in the coming period. Therefore, one must be patient and avoid making hasty decisions.
Bitcoin is doubtful of crossing the $100,000 barrier before the end of the year
As for the predictions of Bitcoin price crossing the $100,000 barrier by the end of 2024, many traders remain cautious. They believe that it still needs more momentum to break through, especially in light of the ongoing uncertainty and high volatility.
Bitcoin continues to test a series of lower highs as support, Rekt Capital said in a post on X on December 3. It noted that as long as this trend continues, the price could fall towards the support level at $96,400.
For his part, Szymon Sypniewicz, co-founder of the Ramp network, expressed his uncertainty about Bitcoin crossing the $100,000 barrier before the end of the year, explaining that the market may go through some fluctuations before achieving this goal.
Buying opportunity or risk to beware of?
Expectations vary between those who believe that the market may witness a significant rise in the coming months, and those who believe that the ongoing corrections may hinder the achievement of this goal.
Whatever the case, the market is likely to remain highly volatile, with a potential crash likely. Some analysts see these events as an opportunity to buy and re-engage in the market.
But at the same time, caution remains necessary, especially in light of the continuous flow of Bitcoin to exchanges. This may be a sign of a possible sell-off in the future.
Investors should closely monitor technical indicators and treat any signals of potential sharp corrections with caution.
Finally, we must not forget that predicting the direction of price movements in the digital currency market is very difficult, no matter how experienced and reputable the analyst is. Despite the great opportunities it offers, it is also one of the most dangerous financial markets, in fact, the most dangerous of all.
Therefore, it is important for the trader to be flexible in his trading and investment strategies, while applying a very strict policy to manage high risks, to achieve the best possible returns and not to lose your money in the blink of an eye.
