Bitcoin: $1.6 Billion Wiped Out In A Cascade Of Abnormal Liquidations

Among all the bull run stories surrounding Bitcoin, this one stands out: a BTC reaching heights of over $100,000, a record number of addresses… But at the heart of this euphoria, certain constants remain, notably the liquidations. In conditions described as “unusual,” Coinbase played a key role in this brutal correction that shook the entire crypto market.

Coinbase: the central role in the fall of Bitcoin

The Bitcoin news: the data recently released by Ltrd highlights “crazy” behavior from traders, particularly on Coinbase. Last Monday, BTC dropped to $94,000, filling a market inefficiency identified by analysts, with a probability of 96%.

Today’s dump resulted in the biggest liquidation since 2021. I would like to present a microstructure view of this entire situation. As always, this thread is full of insights, charts, and comments.

Retweet if you enjoyed the analysis. pic.twitter.com/uCbZmPFbc5

— ltrd (@ltrd_) December 10, 2024

This movement, although expected, led to massive liquidations, reminiscent of those in 2021.

Even more striking, Coinbase triggered the storm. One hour before the major drop, its traders started to aggressively sell, sparking a cascade of forced liquidations:

• $1.6 billion liquidated on the crypto market;
• 142 million BTC longs liquidated;
• Compared to Ethereum, 208 million longs were liquidated.

As Ltrd explains, this phenomenon highlighted an abnormal selling pressure:

“Massive orders caused a chain reaction in an otherwise mature market.“

A crypto market trapped in unpredictable mechanics

If some see it as a disaster, others view this reset as a blessing to stabilize altcoins. Analyst Jelle notes: “With this excess leverage cleaned up, the market is in a better position.“

However, nervousness persists. XRP and other altcoins have undergone severe corrections, leading to an overall decline of 11% in crypto capitalization. These unexpected fluctuations reflect a complex mechanism, where each major movement triggers cascading reactions.

CoinGlass, a liquidation tracking specialist, describes this episode as the “largest long liquidation of this bullish cycle“. This reset, although painful for over-leveraged traders, could provide a new lease on life for the market… or worsen its volatility.

Ultimately, the interaction between liquidations and Bitcoin’s price is complex. While these movements can propel BTC to dizzying heights, they can also precipitate a market collapse, sometimes up to 75%.