Crypto Liquidations Near $300M as Market Faces Continued Pressure

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As a seasoned researcher with over a decade of experience in financial markets, I’ve seen my fair share of market volatility and turbulence. However, the recent cryptocurrency market crash, particularly the plunge of Bitcoin below $95,000, has been nothing short of breathtaking.

Over the past week, the cryptocurrency market has plummeted dramatically, causing Bitcoin (BTC) to dive below $95,000, representing a steep 10% drop over seven days. This sudden descent has led to significant losses for altcoin and futures traders, particularly those holding long positions who have felt the full force of the downturn.

On December 23rd (Monday), positions worth approximately $300 million that were leveraged were liquidated as the price of Bitcoin dropped sharply. The majority of these liquidations involved traders who had anticipated Bitcoin’s price to rise above its current level of $94,951. This is the lowest point for Bitcoin since mid-November, when optimism caused by Donald Trump’s election victory momentarily pushed prices up.

Traders Face Heavy Losses amid Market Chaos

As per CoinGlass’s data, a collective loss of around 294.66 million dollars was experienced by traders, with long traders accounting for about 194 million and short sellers responsible for approximately 99 million. Bitcoin played a significant role in these losses, contributing to around 64 million dollars worth of it, with long traders bearing the brunt of 43 million dollars in losses. Meanwhile, Ethereum, with a 24-hour volatility of 1.5%, had a market cap of $402.31 billion, a 24-hour volume of $30.69 billion, and also presented challenges to traders, resulting in losses of around 60 million dollars.

Worldwide chaos in financial markets impacted around 105,495 traders, with one trader on Binance losing a staggering $4.76 million from a single Bitcoin transaction. Other prominent trading platforms such as Bybit, OKX, and HTX also experienced substantial losses due to forced sales, underlining the far-reaching consequences of the economic slump.

According to financial experts, the Federal Reserve’s stricter monetary policy significantly influenced the recent market drop. Although the anticipated adjustment in borrowing rates was expected, the Fed’s decision to decrease the number of rate cuts it intends to implement by 2025 – from four to two – indicated a more assertive stance. This change has led to increased investor apprehension and played a part in the market’s decline.

Moreover, Chair Jerome Powell made it clear that the Federal Reserve will not be involved in a proposed strategy for a government-backed Bitcoin reserve. Furthermore, he stressed that, as per existing regulations, the Fed is not allowed to hold Bitcoin assets.

“We are not allowed to own Bitcoin, and we’re not looking for a law change.”

Expert Opinions Highlight Critical Levels

As a crypto investor, I’ve been closely monitoring Bitcoin’s movements, and according to Markus Thielen, the head of research at 10x Research, the $95,000 price level is a significant milestone for risk management. He shared his insights on this matter over X (formerly Twitter).

In our December 9th report titled ‘Is Bitcoin Entering the Death Zone?’, we identified the $95,000 mark as a crucial support level for Bitcoin. As we’re seeing now, this level is gaining significance due to several factors. First, the Federal Reserve’s recent shift towards a more aggressive monetary policy, known as their ‘hawkish pivot’. Second, potential economic maneuvers from the US Treasury Secretary in 2025 that could impact liquidity. Lastly, other market conditions are growing less favorable, making things even more challenging for Bitcoin.

Due to a steep drop in Bitcoin’s price below $95,000, the overall value of cryptocurrencies decreased by nearly 10% over the course of a week. This decline resulted in the liquidation of leveraged positions worth about $294.66 million, with long traders responsible for approximately $194 million of those losses. In total, around 105,495 traders experienced losses, with one Binance user losing a substantial $4.76 million in a single trade.

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2024-12-23 13:24