The number of liquidations has exceeded the '312 crash'.
Article author: 1912212.eth, Foresight News
Source: Foresight News
Since breaking above the $100,000 mark, Bitcoin has not stabilized as expected. Last night around 11 PM, after a brief breakthrough of $100,000, it started to decline, reaching as low as around $94,150 by 5 AM today, and has now slightly rebounded to around $96,000.
Although Bitcoin has not seen a significant drop, the performance of Ethereum is not optimistic. This morning around 7 AM, it dropped from $4,000 all the way down to around $3,500 before slightly rebounding to around $3,700, with a daily decline of over 5%. With Ethereum unstable, other altcoins are collectively showing signs of 'wavering morale.'
In the past 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%, with ARKM dropping over 20% and IO dropping over 12%. In the L2 sector, OP dropped over 14% and ARB dropped over 17%.
The contract data is appalling. According to Coinglass data, over the past 24 hours, the total liquidation across the network reached $1.725 billion, with long positions liquidated totaling $1.557 billion, affecting approximately 574,168 individuals. The largest liquidation occurred on Binance's ETH/USDT, valued at $16.69 million.
If we consider only the number of liquidations, today's liquidation data even exceeds the 100,000 people of the '312 crash'.
The market is bleeding; what is the reason for the crash?
There is a significant amount of leverage in the market.
The market is filled with a lot of leverage. As early as December 6, Galaxy Digital CEO Mike Novogratz, in a recent interview with CNBC (commenting on BTC breaking $100,000), stated that there is a global surge in Bitcoin purchases, marking it as one of the first global assets. He warned that there is a significant amount of leverage in the system, and he is confident that there will be one or two violent corrections 'to test your soul'; this leverage will eventually be cleared out.
Since Trump's victory on November 5, open interest in Bitcoin futures has surged significantly from $39 billion on November 5 to $60 billion in early December, with trading activity and market speculation increasing rapidly.
Taking the crazy cryptocurrency trading in South Korea as an example, last month's CryptoQuant data showed that the monthly total trading volume of stablecoins in South Korea's top five CEXs—Upbit, Bithumb, Coinone, Korbit, and GOPAX—was approximately 16.17 trillion Korean won ($11.5 billion). This figure includes the total trading volume of stablecoins such as Tether (USDT) and USDC issued by Circle, and it has increased sevenfold compared to the approximately 2 trillion Korean won recorded at the beginning of the year. This is also the first time that South Korea's monthly stablecoin trading volume has exceeded 10 trillion Korean won.
Yesterday, CryptoQuant analyst ShayanBTC's chart also showed that the Ethereum funding rate indicator in the futures market has surged to its highest level in months, with traders generally expecting it to reach 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 the annualized rate for borrowing USDT exceed 50% during the recent altcoin frenzy. This data indicates that a significant number of users are leveraging by borrowing USDT through staking. The on-chain lending leader AAVE has seen the annualized rate for USDC deposits on the Ethereum network reach as high as 46%, while the deposit rate for USDT has reached 34%.
As of the time of writing, the annualized rates for stablecoins across exchanges and on-chain lending have returned to normal levels.
Global liquidity continues to decrease.
Cryptocurrency assets are increasingly affected by macroeconomic factors, while global liquidity, which supports their prices, is decreasing.
Moreover, many investors believe that the Federal Reserve will continue to cut interest rates, but many institutions predict that the number of rate cuts by the Fed may be limited. Morgan Stanley economists expect the Fed to cut rates by 25 basis points in December and again in January, totaling only two cuts.
The liquidity fuel provided by the market is increasingly limited, making price increases more and more feeble. The above chart shows a steep decline, prompting some liquidity analysts to warn of an impending correction.
In the 2017 cycle, this situation occurred in December 2017, and the bull market ended a month later.
In the 2021 cycle, this situation occurred again in April 2021, and a month later, altcoins plummeted by 50%.
Weiss Crypto analyst Juan M Villaverde stated in his analysis of this significant drop that it may not be the right time to sell, but it should be seen as a warning that the recent market is unhealthy, and its ultimate outcome usually results in the collapse of altcoins. Bitcoin's $100,000 level is a key level; if Bitcoin can break through and stabilize again, this altcoin rebound will not end prematurely. However, if Bitcoin cannot hold above $100,000, the fate of altcoins is likely to fall back to the starting point.
Matrixport's analysis indicates that while stablecoin-related indicators remain at relatively high levels compared to the past 12 months, the weekly inflow has significantly retreated from a peak of $8 billion to $4 billion.
This indicator needs continuous monitoring. If the inflow decreases further, it may indicate that the market will enter a prolonged consolidation period, especially during the typically quiet Christmas holiday period at the end of the year. Even if the trend of slowing inflows may persist, the outlook for market performance in 2025 remains optimistic. Bitcoin's price is expected to rise steadily, but short-term increases may moderate.
Additionally, according to CryptoQuant data, during the period of Bitcoin's decline, Coinbase's premium surged.
This kind of rebound usually indicates that when a considerable number of small retail investors experience excessive panic selling, U.S. institutional investors aggressively buy in.
