Original Title: "Bitcoin Plunges to $94,000, $1.7 Billion in Liquidations Across the Network: In-Depth Analysis of the Ethereum and Altcoin Markets"
Original Author: Alvis, MarsBit
In the early hours of today, the price of Bitcoin plunged sharply to $94,000, triggering a violent fluctuation in the cryptocurrency market, with Altcoins performing even more poorly, with most tokens falling by 20%-30%. As of the time of writing, Bitcoin has rebounded somewhat. This market turmoil led to a total of $1.716 billion in liquidations across the network, involving 570,876 traders. This event not only became the largest liquidation wave in nearly 2 years, but also reflects the structural risks and emotional volatility currently present in the crypto market.
This article will provide an in-depth analysis of the background, data, market impact, and future trends of this event.
Largest Liquidation Scale in a Year: Leveraged Trading Becomes a Risk Explosion Point
This liquidation event set a new record of $1.716 billion in liquidations so far this year, exceeding the approximately $500 million in liquidations seen last month. Long positions suffered the brunt of the losses, accounting for $1.53 billion, while short positions lost $155 million. Data shows that small Altcoins have become the "hardest hit area" of this liquidation, with a liquidation amount of $564 million, of which long positions accounted for more than 96%.
Hardest Hit Areas: The Logic Behind Platform Data
Binance led the way in this liquidation, with a total liquidation amount of $740 million, accounting for 42% of the total network liquidation.
OKX and Bybit ranked second and third, with liquidation amounts of $422 million and $369 million, respectively. The largest single liquidation transaction occurred on Binance's ETH/USDT contract, amounting to $19.69 million.
Bitcoin and Ethereum, as the two core assets of the crypto market, were not spared either.
Bitcoin plunged below the $100,000 psychological barrier in a short period of time, dropping more than $6,000 in a single day, recording $182 million in liquidations, of which long positions accounted for 77%.
After failing to break through the $4,050 key resistance level, Ethereum retested the $3,500 support, recording $243 million in liquidations, of which long positions lost $219 million.
Historical Perspective: Why Was the Liquidation Scale So Huge This Time?
Large-scale crypto market liquidation events are not uncommon, but the scale of this liquidation wave is clearly exceptional.
From a trend perspective, since 2022, with the expansion of the market size and the increase in leverage, the total liquidation amount has continued to increase. More importantly, the concentrated risk exposure of leveraged traders has made the market more fragile when facing extreme volatility.
It is worth noting that over the past year, the market has experienced multiple liquidation peaks, but the scale has mostly hovered between $500 million and $1 billion. However, this staggering amount has surpassed the new high in crypto market liquidations since the 519 event in 2021, and may set a record for this bull market, far exceeding the 312 event in 2020.
The main reasons for this liquidation wave include: the chain reaction of high-leverage positions, the liquidation chain triggered by violent market fluctuations, and the dominant long position structure. Especially the needle-like plunge of Bitcoin triggered leveraged liquidations, coupled with the high volatility of the Altcoin market, causing long positions to account for more than 90% of the liquidation amount. Compared to the external shocks of the 312 event, this is more the result of internal leverage imbalances.
This once again warns investors: in a highly volatile market, rational control of leverage is the key to long-term participation.
Ethereum: From On-Chain Activity to the Resilience of the Derivatives Market
On-Chain Data and Network Activity
DApp Trading Volume Ranking in the Past 7 Days
As the second-largest asset in the market, Ethereum has shown a certain resilience in this liquidation wave. On-chain data shows that Ethereum network transaction volume surged 24% in the past week, reaching $24.2 billion, and with Layer 2 solutions like Base, Arbitrum, and Polygon, the total transaction volume soared to $48.6 billion, far exceeding Solana's $29.5 billion, indicating that Ethereum network activity remains high.
Additionally, since November 29, the inflow of ETH ETF funds has reached a historical high of $1.17 billion, injecting liquidity into the market. However, ETH has still failed to break through the $4,050 long-term resistance level, and the pressure at this technical barrier has obviously constrained its price trend.
Derivatives Market Signals: Optimistic Sentiment Not Completely Dissipated
From the futures and options market, the ETH derivatives market has maintained relatively strong resilience.
The annualized premium of Ethereum futures remains at 17%, far higher than the neutral level of 10%, indicating sustained high demand for ETH leverage.
At the same time, the skewness of Ethereum options has dropped from -7% to -2%, indicating that market sentiment has shifted from extreme optimism to neutrality, but there are no obvious bearish signals yet.
Furthermore, the perpetual contract funding rate is currently 2.7%, higher than the neutral threshold of 2.1%, indicating that the market's demand for short-term leverage remains strong. However, the funding rate has gradually declined from the peak of 5.4% on December 5, which may also reflect increased caution among some traders about market volatility.
Macro and Micro: Dual Factors Affecting Market Sentiment
Crypto market volatility often accompanies changes in macroeconomic variables. This plunge is no exception, with the macroeconomic environment clearly impacting investor confidence.
Recently, China's November inflation data fell 0.6% month-on-month, reflecting the risk of global economic growth weakening. Nvidia's stock price decline due to antitrust investigations has also added to the downward pressure on the tech sector, indirectly affecting investor preference for risk assets.
At the same time, the volatility and structural risks of the cryptocurrency market itself have exacerbated the panic sentiment. While on-chain activity data and ETF fund inflows have provided some support to the market, they have not completely offset the negative impact of the external environment.
Future Outlook: Can Altcoins Catch a Breath?
Technical Aspects and Key Support Levels
Bitcoin needs to firmly hold the $100,000 key psychological barrier to stabilize market sentiment; Ethereum needs to challenge the $4,050 resistance level again to restore investor confidence. As for Altcoins, although the current liquidation ratio is relatively high, the market may have opportunities for rebound after a deep correction, especially for projects with strong fundamentals and community support.
Structural Opportunities and Risks
The actions of institutional investors in this liquidation event are worth watching. The inflow of ETF funds and the improvement in on-chain data may provide a foundation for future market recovery, but the high-leverage operations of retail traders remain the main source of market fragility. In the short term, as the market volatility gradually subsides, professional investors may re-position their positions, laying the groundwork for the next market cycle.
Conclusion: Market Recap and Warnings After the Clearing Storm
This clearing event once again highlights the high volatility and high-risk characteristics of the cryptocurrency market. The needle-like plunge of Bitcoin and Ethereum not only brought short-term panic, but also reminded investors to manage their leveraged positions prudently and avoid uncontrollable risks due to market fluctuations.
According to CoinGlass data, the probability of Bitcoin rising in December and January over the past 12 years is 50%. This historical data shows that the overall performance of the cryptocurrency market is relatively flat at the end and beginning of the year, with increased volatility but unclear trends. In the future, investors need to pay more attention to market data, macroeconomic environment, and the dynamic changes of leveraged positions, and do a good job of risk management in their layout to support their long-term investment strategies.
