On Thursday evening, Bitcoin's price unexpectedly plummeted by 6.3% to a weekly low of only $92,000 within 3 minutes, before quickly recovering to $97,600 and closing the session at $97,100, down 1.7% for the day.
Over $1 billion liquidated in just a few hours
According to data from the exchange, the drop has led to more than $1.07 billion being liquidated across the market, with up to 80% being long positions (betting on price increases).
Specifically, $390 million was liquidated in the past 4 hours, mainly from investors using high leverage.
Pratik Kala, portfolio manager at Apollo Crypto, noted that the market has become "too hot" as funding rates have surged. This is a sign of excessive speculation.
Causes and warnings from experts
High funding rates indicate that many investors are heavily betting on continued price increases. When the market reverses, these positions are liquidated, creating a chain reaction that drives Bitcoin's price down sharply.
However, Bitcoin has still increased by more than 39% in the past 30 days, thanks to the optimism surrounding the election victory of President-elect Donald Trump. Experts advise investors to consider "taking profits" instead of expecting prices to keep rising indefinitely.
Trump and his influence on the market
The recent rise in Bitcoin's price is attributed to Trump's support campaign for cryptocurrency. On Thursday, he continued to take credit for Bitcoin surpassing the $100,000 mark. At the same time, he appointed Paul Atkins, a figure friendly to the cryptocurrency industry, as the new Chairman.
Although this sudden drop serves as a reminder of the risks in cryptocurrency investing, Bitcoin continues to maintain its appeal in the market with long-term promises from political and technological factors.