Author: 1912212.eth, Foresight News
Bitcoin has not stabilized as expected after breaking through the $100,000 mark. After briefly breaking through $100,000 at around 11 pm yesterday, it has been declining all the way. As of around 5 am today, it once fell to around $94,150. It has now rebounded slightly to around $96,000.
Although Bitcoin did not fall sharply, the trend of Ethereum was not optimistic. At 7:00 this morning, it fell from $4,000 to around $3,500 before rebounding slightly to around $3,700, a single-day drop of more than 5%. Ethereum is unstable, and the performance of other altcoins is collectively “shaken”.
In the 24-hour decline, the public chain sector SOL fell by more than 8%, SUI fell by more than 12%, APT fell by more than 16%, SEI fell by more than 16%, AI sector WLD fell by more than 19%, ARKM fell by more than 20%, IO fell by more than 12%. In the L2 sector, OP fell by more than 14%, and ARB fell by more than 17%.
The contract data is terrible. According to Coinglass data, in the past 24 hours, the entire network had a liquidation of US$1.725 billion, a long position liquidation of US$1.557 billion, and a total of about 574,168 people were liquidated. The largest liquidation occurred on Binance’s ETH/USDT, worth US$16.69 million.
If we only calculate the number of people whose positions were liquidated, today’s liquidation data even exceeds the 100,000 people in the “312 crash”.
The market is in a bloodbath. What is the reason for the crash?
There is a lot of leverage in the market
The market is heavily leveraged. Back on December 6, Galaxy Digital CEO Mike Novogratz said in a recent CNBC interview (commenting on BTC breaking $100,000) that there is a wave of Bitcoin buying around the world, one of the first global assets. He warned that there is a lot of leverage in the system, so he is sure there will be one or two violent pullbacks that “test your soul” and these leverages will eventually clear it out.
Since Trump’s victory on November 5, open interest in Bitcoin futures has risen sharply, soaring from $39 billion on November 5 to $60 billion in early December, with trading activity and market speculation increasing wildly.
Take South Korea, where cryptocurrency is crazy, for example. According to CryptoQuant data last month, the total monthly trading volume of stablecoins in South Korea’s top five CEXs—Upbit, Bithumb, Coinone, Korbit, and GOPAX—was about 16.17 trillion won (US$11.5 billion). This figure includes the total buying and selling volume of stablecoins such as Tether (USDT) and USDC issued by Circle, and is also a seven-fold increase from the approximately 2 trillion 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 won.
Yesterday, a chart from CryptoQuant analyst ShayanBTC also showed that the Ethereum funding rate indicator of futures market sentiment has soared to its highest level in months, and traders generally expect a record high. However, the market may need to adjust to maintain this momentum.
Recently, various centralized exchanges such as Binance and Bybit have even exceeded 50% of their annualized lending rate for USDT during the recent altcoin craze. This data shows that a considerable number of users increase their leverage by staking USDT. AAVE, the leader in on-chain lending, has an annualized USDC deposit rate of up to 46% on its Ethereum network, and a USDT deposit rate of 34%.
As of press time, the annualized rates of various exchanges and on-chain lending stablecoins have returned to normal levels.
Global liquidity continues to decline
Crypto assets are increasingly affected by macroeconomic factors, while the global liquidity that supports their prices is decreasing.
In addition, many investors believe that the Fed will continue to cut interest rates, but many institutions currently predict that the Fed may cut interest rates a limited number of times. Morgan Stanley economists expect the Fed to cut interest rates by 25 basis points in December and January next year, respectively, and only twice so far.
The less liquidity fuel the market can provide, the weaker the price increase will be. The above chart shows that the decline has been so steep that some liquidity analysts have warned of an impending correction.
- In the 2017 cycle, this happened in December 2017, and the bull market ended a month later.
- This happened again in April 2021 during the 2021 cycle, and a month later, altcoins plunged 50%.
Juan M Villaverde, an analyst at Weiss Crypto, said in his analysis of this sharp drop that it is not necessarily the right time to sell now, but it can be regarded as a warning that the market has been unhealthy recently, and its final result is always the collapse of altcoins. Bitcoin’s $100,000 is a key level. If Bitcoin can break through and stabilize again in the future, then the rebound of altcoins will not end prematurely. Once Bitcoin cannot stabilize at $100,000, the ending of altcoins is likely to fall back to the starting point again.
Matrixport stated in its analysis that although stablecoin-related indicators are still at a high level in the past 12 months, weekly inflows have dropped significantly from a peak of US$8 billion to US$4 billion.
This indicator needs to be monitored continuously. If the inflow volume decreases further, it may mean that the market will enter a longer period of consolidation, especially during the Christmas holiday at the end of the year, which is usually a quiet period. Even if the trend of slowing inflows may continue, the market performance in 2025 remains optimistic. Bitcoin prices are expected to rise steadily, but the increase may be moderate in the short term.
In addition, according to CryptoQuant data, Coinbase’s premium soared during the period when Bitcoin fell.
Such rebounds typically indicate aggressive buying by U.S. institutional investors when a significant number of small retail investors are engaging in excessive panic selling.