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Highlights
- - Over $1 billion liquidated in the crypto market within 24 hours.
- - Bitcoin (BTC:BTC) fell below the $100,000 mark amid market volatility.
- - Analysts suggest the downturn may be short-term amid ongoing market trends.
The cryptocurrency market faced significant turbulence as over $1 billion was liquidated within 24 hours, driven by unexpected shifts in market sentiment. The rapid sell-offs came amid a decline in Bitcoin (BTC:BTC), which dipped below the $100,000 psychological benchmark, erasing its recent gains from a strong bullish period.
According to data from CoinGlass, approximately $856.66 million of the liquidated positions were long positions, highlighting the unpreparedness of traders for the sudden market reversal. Bitcoin fell 3.36% to trade at $97,350, underscoring the abrupt downturn after weeks of positive momentum.
Market Analysts Discuss Short-Term Trends
Analysts believe the downturn may be temporary. One market expert described the recent activity as “short-term angst” rather than a prolonged bearish trend. Previous instances in December have shown similar market behavior. On December 5, a dip below $93,000 resulted in a $300 million liquidation within minutes. Another drawdown on December 10 led to over $1.7 billion in leveraged position liquidations, marking the largest event of its kind this cycle.
The volatility has been characterized as typical of a broader bull run. Crypto analyst Caleb Franzen pointed out that during the last bull run, Bitcoin experienced nine pullbacks within 16 months, all followed by higher highs. Franzen advised traders to remain cautious but optimistic, emphasizing that fluctuations are part of the market's growth trajectory.
Expectations Around Policy and Market Direction
As the crypto market navigates the recent upheaval, some analysts are shifting focus to macroeconomic factors, including the upcoming inauguration of Donald Trump as the 47th U.S. president in January 2025. There is speculation that the new administration may introduce plans for a Bitcoin strategic reserve, adding another layer of uncertainty to the market.
Fred Krueger, a well-known Bitcoin advocate, cautioned against leveraging positions in the volatile market, noting that overextension often leads to significant losses. Meanwhile, optimism persists about a potential "Santa rally," with analysts suggesting the market could rebound as conditions stabilize.
Despite the recent challenges, the crypto market continues to evolve, with analysts anticipating further volatility and opportunities as external factors and market dynamics play a larger role in shaping its direction.
