Yesterday, a historic moment arrived—Bitcoin broke through the $100,000 mark, soaring to $104,000 at one point, and the market was in jubilation, with investors predicting that an epic bull market was about to explode.
However, while most investors are still in their sweet dreams, Bitcoin suddenly went out of control, and the plummet triggered a bloodbath!
Within just a few minutes, the price spiked to $91,000, and over $1.1 billion worth of futures positions were liquidated. Shockingly, this wave of crashes did not affect other altcoins, and currently, BTC has slightly rebounded to above $97,000, leaving the market shrouded in fog!
Within just a few hours, thousands of contract users faced liquidation due to severe market fluctuations! Bitcoin's crazy drop caught many originally confident long investors off guard.
This is precisely why I repeatedly remind everyone: contract trading carries huge risks, especially in a bull market, where spike phenomena occur frequently, and a moment's carelessness may lead to instant liquidation!
Why did Bitcoin plummet sharply this morning?
1. De-leveraging and major cleaning: The market requires liquidation, retraction, and reasonable adjustment.
The market will not rise forever, nor will it always fall; timely pullbacks can actually benefit healthy development. Yesterday, Bitcoin broke through the $100,000 mark, and the market's FOMO sentiment soared, with the fee rate for Bitcoin once skyrocketing to 0.1%, and lending rates even surpassed an annualized rate of 80%. This overheated situation is evidently unhealthy and reminds investors that it is time to reduce positions appropriately.
However, such large-scale liquidation events also have their positive side. They can effectively lower excessively high funding rates, reduce leverage risks in the market, cool down the market, and set the stage for a subsequent strong rebound!
2. Long-term holders begin to take profits.
After Bitcoin broke through the $100,000 mark, long-term holders began to take profits. The Long-Term Holder Spent Output Profit Ratio (LTH-SOPR) indicator shows that long-term holders sold Bitcoin that has achieved four times their original purchase price in profit.
When Bitcoin reaches $100,000, caution is advised, as profit-taking may occur. Additionally, concerns about macroeconomic conditions and regulatory policies may also exacerbate market volatility.
However, this is also a relatively normal phenomenon in the Bitcoin bull market, and the current level of profit-taking is still within a healthy range.
3. Mentougou transferred over 20,000 Bitcoins.
Yesterday, the news of over 20,000 Bitcoins being transferred from Mentougou attracted widespread attention in the market and became a focal topic.
Today, this address transferred out more than 3,000 Bitcoins again. Although this news caused quite a stir, the influence of Mentougou has gradually diminished. This transfer of over 20,000 Bitcoins is likely just a repayment action and will not trigger a large-scale sell-off in the market.
Although it may cause some fluctuations in the market in the short term, considering the current demand for BTC ETFs, the impact of these over 20,000 Bitcoins on the market is minimal—insufficient even to fill three days' worth of ETF demand. The impact of this rumor on Bitcoin's price is likely to be greatly exaggerated!
4. Non-farm data tonight.
Tonight, the U.S. non-farm payroll data for November is about to be released, with global attention focused on the unemployment rate and wage levels. If the unemployment rate drops further and wages rise, it signifies a strong U.S. economy. Although the probability of the Federal Reserve lowering interest rates in December may decrease, a stable economy will also support the market.
However, if the unemployment rate rises and wage growth stagnates, this could increase the likelihood of the Federal Reserve lowering interest rates. It also means that the U.S. economy could face instability risks, especially as an increase in unemployment rate may trigger a new round of market concerns about an economic recession, leading to a pullback.
Overall, during a bull market, it's better to avoid trading contracts. Last night, Bitcoin experienced a violent flash crash, dropping from $104,000 to around $90,000, a decline of over $10,000 in a very short time, primarily aimed at liquidating leveraged long positions. It's easy to make money in a bull market, but without sufficient risk awareness, the speed of losing money can be even faster.
The violent sell-off of Bitcoin last night was clearly manipulated, with a clear purpose—to wash out weak hands! By cleaning up long leverage, it allows the market to breathe more easily and paves the way for the next wave of upward movement. This type of washing operation is healthier and prepares for subsequent rises.
It is worth mentioning that while Bitcoin experienced a flash crash, altcoins did not follow suit; this signal is very clear—an altcoin bull market has indeed arrived!
The resilience of the altcoin market in cryptocurrency is evident.
Interestingly, although the decline of Bitcoin brought short-term shocks to the market, altcoins (such as Solana, Ethereum, Dogecoin, etc.) have shown strong resilience and are no longer following the drop, even rebounding sharply. This indicates that every significant drop in Bitcoin during a bull market will likely be a favorable factor for altcoins.
Bitcoin's dominance has fallen from a high of 62% to 53.8%.
Despite the severe market fluctuations, the overall potential of the cryptocurrency ecosystem is still not to be underestimated. More and more investors are beginning to realize that besides Bitcoin, other digital assets may also achieve sustainable growth in the long term, and the season for altcoins is still heating up.
Although market sentiment is affected by fluctuations, the investment demand for quality tokens remains strong, and the future is still full of opportunities.
Next, we can pay attention to the potential of the AI sector! Elon Musk's XAI company signed a $1.08 billion AI server order with NVIDIA, which will be delivered in January next year, with tight deadlines and heavy tasks. BlackRock also believes that next year, the AI boom will continue to drive U.S. stocks, thereby promoting economic growth.
From the comments of these crypto moguls, it seems that after a period of sluggishness in the second half of the year, the AI sector in cryptocurrency is likely to experience explosive growth.
Aside from AI, sectors such as RWA, SOL, meme, TON, and SUI are also becoming hot topics in the new round of the cryptocurrency market, with constant rotation and speculation. We just need to be patient and wait, as opportunities may arise at any time.
There have also been significant developments in the AI sector recently. OpenAI will hold 12 live broadcasts in the next 12 days, and if they release innovations similar to GPT-3.5 at the end of 2022 or Sora in early 2024, the AI craze is likely to ignite again. This could drive a surge in the AI sector, making AI projects worthy of our close attention in the coming month!
