Bitcoin (BTC) liquidity has reached a three-year record as a new BTC price drop has brought the market to a much-watched target.
New research from the X Ltrd account reveals the "crazy" behavior of traders as the total cryptocurrency market capitalization fell by 11% on December 9.
Analysis: Coinbase traders "aggressively" sell Bitcoin
Bitcoin has performed as expected in the first Wall Street trading session of this week, dropping to around $94K.
This accounts for about 50% of a major drop from December 5 - a drop that has created a market "gap" with the potential to fill up to 96%, according to the analysis.
Although this has happened, the liquidity accompanying the price drop is not like the chaos of last week.
Ltrd summarizes: "Today's drop led to the largest liquidation since 2021."
BTC/USD chart with market impact. Source: Ltrd/X
Analyzing the movements on the trading floor, Ltrd reveals that Coinbase, the largest US trading platform, played a key role in triggering the downward momentum.
"We observed something crazy - Coinbase traders started aggressively selling about an hour before the big drop began," the analysis continues.
"Of course, the biggest drop was triggered by a chain of liquidations, but this constant selling pressure was crucial in pushing prices into an area where over-leveraged positions had to be closed."
CVD data for Binance, Coinbase. Source: Ltrd/X
The accompanying chart compares the cumulative volume delta (CVD) data for both Coinbase and the world's largest exchange Binance.
"Certainly not normal"
Data from the monitoring source CoinGlass calculates the total cryptocurrency liquidation at over $1.6 billion in 24 hours as of the time of writing on December 10.
Of this, BTC longs suffered less than ETH longs, with $142 million versus $208 million in liquidations, respectively.
CoinGlass confirmed: "The largest long liquidation in this bull cycle so far," with watchers on X.
Cryptocurrency liquidations (screenshot). Source: CoinGlass
While lamenting the "nightmare of liquidations" for altcoins, more optimistic views see an opportunity to bring the market back to a more stable state.
Renowned trader Jelle wrote: "With that leverage gone, the market has been reset, with Altcoins retesting important levels as support. Good."
Meanwhile, Ltrd notes the "abnormal" nature of the liquidation chain, with altcoins including XRP (XRP) in the crosshairs.
"We don't know exactly what happened, but it's certainly not normal."
