Original title: (Bitcoin plummets to $94,000, total network liquidations reach $1.7 billion: A deep analysis of Ethereum and altcoin markets)
Original author: Alvis, MarsBit
In the early hours of today, the price of Bitcoin briefly dropped to $94,000, triggering severe fluctuations in the cryptocurrency market, with altcoins performing even worse, with most tokens falling by 20%-30%. As of the time of writing, Bitcoin has rebounded somewhat. This market turmoil led to a total liquidation amount of $1.716 billion across the network, affecting 570,876 traders. This event not only became the largest wave of liquidations in nearly two years but also reflects the current structural risks and emotional fluctuations in the crypto market.
This article will deeply analyze the background, data, market impact, and future trends of this event.
The scale of market liquidations has reached a one-year high: leveraged trading becomes a risk hotspot
This liquidation event set a new record of $1.716 billion in liquidation amounts since 2023, exceeding last month's single-day liquidation scale of about $500 million. Notably, long positions suffered particularly heavy losses, amounting to $1.53 billion, while short positions lost $155 million. Data shows that small altcoins have become the 'disaster area' of this liquidation, with liquidation amounts reaching $564 million, of which more than 96% were long.
Liquidation disaster area: The underlying logic of platform data
Binance is far ahead in this liquidation, with a total liquidation amount of $740 million, accounting for 42% of the total network liquidation.
OKX and Bybit rank second and third, with liquidation amounts of $422 million and $369 million, respectively. The largest single liquidation transaction occurred in Binance's ETH/USDT contract, amounting to $19.69 million.
Bitcoin and Ethereum, as the two core assets of the crypto market, have also not been spared.
Bitcoin briefly fell below the psychological threshold of $100,000, dropping more than $6,000 in one day, recording $182 million in liquidations, of which long losses accounted for 77%.
After failing to break through the key resistance level of $4,050, Ethereum's price retested the support at $3,500, recording $243 million in liquidations, of which long positions lost $219 million.
Historical perspective: Why is this liquidation scale so huge?
Large-scale liquidation events in the crypto market are not uncommon, but the scale of this liquidation wave is clearly exceptionally prominent.
From a trend perspective, since 2022, as the market scale expands and leverage increases, the total amount of liquidation has continued to rise. More importantly, the concentrated risk exposure of leveraged traders makes the market more vulnerable when facing extreme volatility.
It is noteworthy that the market has experienced multiple peaks of liquidation over the past year, but the scale mostly hovered between $500 million and $1 billion. However, this amount has exceeded the new high of liquidation amounts in the crypto market since the 2021 '519' event, which may set a record for this round of the bull market, and is far greater than the 2020 '312' event.
The reasons for this wave of liquidations mainly include: the chain reaction of high leverage positions, the liquidation chain triggered by severe market fluctuations, and the dominant structure of long positions. In particular, the sharp drop in Bitcoin triggered leveraged liquidations, combined with the high volatility of altcoin markets, caused the proportion of long liquidations to exceed 90%. Compared to the external shocks of the 312 event, this time it is more a result of internal leverage imbalance.
This once again warns investors: in a high-volatility market, rationally controlling leverage is key to long-term participation.
Ethereum: From on-chain activity to resilience in the derivatives market
On-chain data and network activity
Top DApp trading volumes over the past 7 days
As the second-largest asset in the market, Ethereum has shown some resilience during this wave of liquidations. On-chain data shows that Ethereum network transaction volume surged by 24% over the past week, reaching $24.2 billion. Combined with second-layer solutions like Base, Arbitrum, and Polygon, total transaction volume soared to $48.6 billion. This figure far exceeds Solana's $29.5 billion, showing that Ethereum network activity remains high.
Moreover, since November 29, ETH ETF inflows have reached a historical high of $1.17 billion, injecting liquidity into the market. Nevertheless, the ETH price has still not been able to break through the long-term resistance level of $4,050, and the pressure at this technical level clearly restricts price movements.
Derivatives market signals: Optimism is not completely dissipated
From the perspective of futures and options markets, ETH's derivatives market still maintains strong resilience.
The annualized premium of Ethereum futures remains at 17%, far exceeding the neutral level of 10%, indicating continued high demand for ETH leverage.
At the same time, the skew of Ethereum options fell from -7% to -2%, indicating a shift in market sentiment from extreme optimism to neutrality, but no clear bearish signals have emerged.
In addition, the perpetual contract financing rate is currently 2.7%, higher than the neutral threshold of 2.1%, indicating strong market demand for short-term leverage. However, the financing rate has gradually decreased from a peak of 5.4% on December 5, which may also reflect an increased vigilance among some traders regarding market fluctuations.
Macro and micro: dual factors influencing market sentiment
The volatility of the crypto market often accompanies changes in macroeconomic variables. This plunge is no exception, as the macroeconomic environment has significantly impacted investor confidence.
Recently, China's November inflation data decreased by 0.6% month-on-month, reflecting the risk of weak global economic growth. Meanwhile, Nvidia's stock price fell due to antitrust investigations, which also intensified downward pressure on the tech sector, indirectly affecting investors' preferences for risk assets.
At the same time, the volatility and structural risks of the cryptocurrency market itself have exacerbated panic sentiment. While the activity of on-chain data and ETF inflows provide some support for the market, they do not fully offset the negative impact of the external environment.
Future outlook: Can altcoins catch a breather?
Technical analysis and key support levels
Bitcoin needs to stabilize above the key psychological level of $100,000 to stabilize market sentiment; Ethereum needs to re-challenge the resistance level of $4,050 to restore investor confidence. As for altcoins, despite the current high liquidation ratio, there may be rebound opportunities in the market after experiencing a deep correction, especially for projects with strong fundamentals and community support.
Structural opportunities and risks
The actions of institutional investors during this liquidation event are worth noting. ETF inflows and improvements in on-chain data may provide a foundation for future market recovery, but the high-leverage operations of retail traders remain a major source of market fragility. In the short term, as market fluctuations gradually calm down, professional investors may reposition themselves to lay the groundwork for the next market cycle.
Conclusion: Market review and warnings after the liquidation storm
This liquidation event once again highlights the high volatility and high-risk characteristics of the cryptocurrency market. The sharp drop in Bitcoin and Ethereum not only caused short-term panic but also reminded investors to cautiously manage leverage positions to avoid uncontrollable risks due to market fluctuations.
According to CoinGlass data, Bitcoin's probability of rising in December and January over the past 12 years has been 50%. This historical data indicates that the overall performance of the crypto market is relatively flat at the end and beginning of the year, with increased volatility but unclear trends. In the future, investors need to pay more attention to market data, macro environment, and the dynamic changes in leverage positions, and manage risks when planning to support long-term investment strategies.
