Crypto Market Saw $1.2 billion Liquidation Amid Inflation Concerns
Nearly $1.25 billion has been liquidated in the cryptocurrency market over the past 24 hours, with the market down nearly 10%.
Bitcoin fell below $96,000, with Meme coin suffering the biggest decline on Thursday.
Inflation forecast triggers massive crypto market correction
According to Coinglas dataBitcoin’s liquidation amount today exceeded $45 million, while Ethereum’s liquidation amount was close to $30 million. This major adjustment occurred in Fed cuts rates by 25 basis points Wednesday.
Typically, interest rate cuts are positive for cryptocurrencies, as lower rates signal a softening of monetary policy. However, what affects the market is Federal Reserve Forecast for 2025. Jerome Powell says Fed expects rates to go higher inflation There will only be two interest rate cuts next year.
Although this level of liquidation is large, Impact on the stock market More serious. The U.S. market lost nearly $1.5 trillion. These massive liquidations raise concerns about a potential bearish cycle.
“Hey guys, now that the bull market is officially over, I just want to say a huge thank you to everyone. I will be deleting all crypto-related social activity and logging out.” One influencer release on X (formerly Twitter)
However, the consensus view among most analysts seems to suggest that today’s liquidation is just a short-term washout.
“Bitcoin market sentiment. It’s the same story every time and it never changes. The market is not designed for the majority to win. Corrections are a natural part of a bull market,” wrote Popular analyst “Cryptocurrency Titan”.
Other analysts, e.g. FerraconeIt is emphasized that these liquidations usually occur at the end of a bull market year, when the market enters a cooling-off period. He also predicted, Bullish sentiment will return After December 17th it continues until the first week of January.
Meanwhile, some analysts predict altcoin season. The increase in Bitcoin liquidations will impact its dominance in the coming months and create new challenges for major altcoins such as Ethereum and Solana.
“If you think altcoin season is over, you need to know this: Total altcoin market cap (excluding BTC and ETH) is approximately $1.05 trillion. It’s hitting the previous altcoin market cap high from November 2021 . The last time something similar happened was in February 2021, when altcoin market capitalization tested its previous high from January 2018.” wrote Lark Davis.
While the Fed’s forecasts have a significant impact on today’s markets, it’s important to understand Bitcoin Still Up Nearly 130% This year. On top of that, some developments in the crypto industry outpace these macroeconomic factors.
Michael Saylor’s MicroStrategy owns nearly 2% of the Bitcoin supply and has been buying continuously since November. The company even purchased BTC worth $3 billion in Decemberwhile assets hover above $100,000.
In addition, other listed companies such as MARA and anti-riot platform A similar Bitcoin acquisition strategy was adopted this month. There are also potential regulatory changes in the future. Global legislators from different countries are Advocate for Bitcoin Reserves.
Therefore, despite macroeconomic factors triggering temporary bearish signals, the long-term outlook for 2025 remains bullish.
Shrinking supply signals potential Bitcoin supply shock
Another reason why we believe Bitcoin will remain bullish is its supply and demand ratio.
According to data Crypto quantificationThe Bitcoin market is showing signs of a potential supply shock, as demand continues to grow while the supply of Bitcoin available for sale continues to decrease. Demand for Bitcoin continues to rise, with the accumulator address adding 495,000 Bitcoins every month.
at the same time, Stablecoin The market capitalization reached $200 billion, marking new liquidity. Optimism about cryptocurrency policy and potential U.S. moves further fueled demand.
On the other hand, sell-side liquidity has dropped to 3.397 million Bitcoin, the lowest level since 2020, which includes exchanges, miners, and OTC desks. The inventory ratio, which measures how long current supply can meet demand, has plummeted to 6.6 months from 41 months in October, underscoring tighter market conditions.
Therefore, this supply shock, along with macroeconomic factors, may be the key catalysts behind today’s liquidation.
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