Bitcoin slightly drops while altcoins crash; is the bull market still ongoing?

The cryptocurrency market recently faced a wave of pullback, with Bitcoin dropping from a peak of $100,000 to $94,150. Altcoins showed even weaker performance, with Ethereum bouncing from $4,000 down to $3,500. This pullback resulted in more than 100,000 liquidations, surpassing the '312 crash'. (Background story: Bull market mining: 6 trading rules to improve trading success rate) (Background information: In a bull market surge, how are retail investors in the cryptocurrency space losing money?) Bitcoin did not stabilize after breaking through the $100,000 mark, and after a brief rise above $100,000 around 11 PM the previous night, it began to decline, reaching around $94,150 by 5 PM yesterday, and is now slightly rebounding to around $97,000. Though Bitcoin did not experience a significant drop, Ethereum's trend is far from optimistic. Yesterday, around 7 PM, it dropped from $4,000 to a low of around $3,500 before weakly rebounding to around $3,700, with a daily decline of over 5%. With Ethereum unstable, other altcoins collectively showed signs of 'shaken confidence'. In the last 24 hours, the public chain sector saw SOL drop over 8%, SUI drop over 12%, APT drop over 16%, SEI drop over 16%, and the AI sector saw WLD drop over 19%, ARKM drop over 20%, and IO drop over 12%. In the L2 sector, OP dropped over 14%, and ARB dropped over 17%. The contract data is dismal. According to Coinglass data, in the past 24 hours, there was a total liquidation of $1.725 billion across the network, with long positions liquidated amounting to $1.557 billion, affecting about 574,168 people, with the largest liquidation occurring on Binance's ETH/USDT, valued at $16.69 million. If we count solely by liquidation numbers, today’s figures even exceed the 100,000 people during the '312 crash'. The market is in chaos; what is the cause of the crash? There is a significant amount of leverage in the market. The market is heavily leveraged. As early as December 6, Galaxy Digital CEO Mike Novogratz stated in a recent CNBC interview (commenting on BTC breaking $100,000) that there is a global surge in Bitcoin purchases, making it one of the first truly global assets. He warned that system memory is heavily leveraged, and he is confident that there will be one or two severe pullbacks that will 'test your soul', and this leverage will eventually be cleared. Since Trump’s victory on November 5, the number of Bitcoin futures open contracts has surged, rising from $39 billion on November 5 to $60 billion in early December, with trading activity and market speculation going wild. For example, in Korea, where trading is frenzied, CryptoQuant data last month showed that the monthly trading volume of stablecoins among the five largest CEXs—Upbit, Bithumb, Coinone, Korbit, and GOPAX—was about 16.17 trillion won ($11.5 billion). This figure includes the total trading volume of stablecoins like Tether (USDT) and USDC issued by Circle, and it has increased sevenfold compared to the approximately 2 trillion won recorded at the beginning of the year. This is also the first time that Korea's monthly stablecoin trading volume has exceeded 10 trillion won. Yesterday, charts from CryptoQuant analyst ShayanBTC also indicated that the Ethereum funding rate indicator for futures market sentiment has surged to its highest level in months, with traders generally expecting a historical high. However, the market may need to adjust to maintain this momentum. Recently, various centralized exchanges such as Binance and Bybit have seen their annualized borrowing rates for USDT exceed 50% during the recent altcoin frenzy, indicating that a considerable number of users are leveraging by borrowing USDT through staking. The on-chain lending leader AAVE saw its Ethereum network's USDC deposit annualized rates peak at 46%, while USDT deposit rates reached 34%. As of the time of writing, the annualized rates for stablecoins on exchanges and on-chain lending have returned to normal levels. Global liquidity continues to decline, with macroeconomic factors increasingly affecting crypto assets, while global liquidity, which supports their prices, is decreasing. Furthermore, many investors believe that the U.S. Federal Reserve will continue to cut interest rates, but many institutions predict that the number of rate cuts may be limited. Morgan Stanley economists predict that the Federal Reserve will cut rates by 25 basis points in December and January, with only two cuts anticipated. The liquidity fuel available in the market is becoming increasingly scarce, leading to increasingly weak price increases. The chart indicates that the decline has become quite steep, prompting some liquidity analysts to warn of an impending correction. This situation occurred in December 2017, one month before the end of that bull market. In the 2021 cycle, this situation reoccurred in April 2021, one month before altcoins plummeted by 50%. Weiss Crypto analyst Juan M Villaverde stated in his analysis of this major drop that it may not necessarily be the time to sell, but it serves as a warning that the recent market is unhealthy, and its ultimate outcome usually results in severe crashes for altcoins. Bitcoin at $100,000 is a critical level; if Bitcoin can break through and stabilize again, the altcoin's rebound will not end prematurely, but if Bitcoin cannot hold above $100,000, the fate of altcoins is likely to fall back to their starting point. Matrixport noted in its analysis that while stablecoin-related indicators remain at relatively high levels over the past 12 months, the weekly inflow has significantly decreased, dropping from a peak of $8 billion to $4 billion. This indicator needs to be continuously monitored; if inflows continue to diminish, it may indicate that the market will enter a prolonged consolidation phase, especially during the typically quiet year-end holiday season. Even if the trend of slowing inflows may continue, the outlook for market performance in 2025 remains optimistic. It is expected that Bitcoin prices will rise steadily, but short-term increases may become moderate. Additionally, according to CryptoQuant data, during the period of Bitcoin’s decline, Coinbase’s premium surged. This rebound usually indicates that when a significant number of small retail investors exhibit excessive panic selling, U.S. institutional investors are aggressively buying. Related reports: Shen Yu analyzes five major difficulties in bull market trading: learn to 'take over' instead of trying to time the peaks. Review: Which 'old altcoins' have created new highs in this bull market? A guide for veterans in the bull market: the higher the leverage, the earlier to take profits; clean out potential coins in one go. "Bitcoin slightly drops while altcoins crash; is the bull market still ongoing?" This article was first published on BlockTempo (the most influential blockchain news media).