Crypto Market Sees $1.7 Billion Wipeout, Biggest Since 2021
On December 9, the broader cryptocurrency market experienced a major crash. While Bitcoin price fell -7% from $101,109 to $94,150, the altcoin market suffered significantly more severe losses. At one point, Ethereum was down -12%, XRP was down -22%, Solana was down -15%, Cardano was down -23%, Dogecoin was down -19%, and Shiba Inu was down -25%.
According to Coingras dataMore than 562,000 traders were liquidated in the past 24 hours, with total liquidations reaching $1.7 billion. The largest single liquidation order occurred in Binance’s ETHUSDT currency pair, worth $19.69 million. Of the $1.7 billion in total liquidations, $1.55 billion involved long positions.
Notably, Bitcoin’s leverage washout was relatively mild compared to altcoins, with $143 million in BTC longs being liquidated. This compares to $219 million in liquidations for ETH, $57 million for SOL, $86 million for DOGE, $53 million for XRP, and $22 million for ADA.
Across the cryptocurrency market, this is the largest leverage washout since April 2021, when single-day cryptocurrency futures liquidations hit a record $10 billion. This surpassed the previous record of $5.77 billion.
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Following the breakout, Bitcoin and most altcoins staged a sharp upward recovery, although they have yet to return to pre-crash levels. In the past 24 hours, BTC is still down -2.4%, ETH is down -4.8%, XRP is down -9.6%, SOL is down -6.4%, and DOGE is down -8.4%.
What caused the cryptocurrency market to crash?
According to cryptocurrency analyst ltrd (@ltrd_), the underlying dynamics start As selling pressure mounted on Coinbase, traders began selling aggressively nearly an hour before the big event. While the eventual plunge was triggered by a ripple effect of liquidations, a prolonged sell-off in the spot market was critical in pushing prices into an area where over-leveraged traders had no choice but to close out their positions.
Overheating funding charges and rising open interest levels mean highly leveraged positions have no chance of escaping once the initial cracks appear. “How do we tell a market is overheated? It’s simple – funding fees plus an increase in open interest. These two factors are drivers of the current market and indicate people are overleveraged,” ltrd explained.
When markets eventually collapse, the impact is uneven. Bitcoin displayed Unlike other instruments, Ethereum showed encouraging signs of accumulation during the decline, suggesting that major buyers may be taking advantage of the opportunity.
But the truly shocking development Happens with XRP On Coinbase, as ltrd said, “You can see some crazy stuff – the market impact of XRP on Coinbase is unbelievable. An absolutely weird thing is happening. In a large market that is relatively mature, we Witnessed a series of large sell orders that caused the market to drop more than 5%. We don’t know exactly what happened, but it is certainly unusual.” Ltrd speculated that these large and unusual sell orders may have come from being forced to liquidate at any price. important participants.
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“It might be worth monitoring this situation over the next few days. Maybe a major player is forced to sell as if there’s no tomorrow,” he mused. The consequence of such an event is that even in so-called deeper markets, a collapse can occur quickly and spread to perpetual swaps trading elsewhere, triggering further liquidations.
ltrd said, “When something like this happens, it’s usually an unintentional flurry of orders. Market makers absorb this selling pressure and hedge against it, causing the signal to propagate across exchanges.” Even a market like XRP with a market capitalization as large as the U.S. The company’s fairly large altcoins, too, still face liquidity constraints that become evident under pressure. “The market remains very illiquid relative to these market capitalizations,” he noted, explaining how this contributes to the observed volatility and drama of such events.
As prices eventually stabilize and begin to rebound off the bottom, ltrd highlights how common this pattern is in overheated markets: “In hot markets, you will always see a rapid reversal from the bottom next. Liquidations are huge, liquidity is limited, but there are still many profit takers looking to buy on the dip. Let’s see who emerges as the winner.”
Macro Analyst Alex Krueger place The whole event comes into a broader perspective. “Nothing has changed. Prices are still expected to rise,” he said, while pointing to future scenarios such as a pro-cryptocurrency U.S. government Donald Trumpwhich can lay a more constructive background for digital assets.
While Krueger noted that there may be more leverage flushes in the coming months, he sees these events as a normalizing force. “Today was a major leveraged rush out. Mainly for altcoins. That’s normal in a hot and highly leveraged market. This is how crypto baptizes newcomers and keeps crypto natives disciplined, “It’s never fun to be stuck in a leveraged rush,” Krüger said, “but that’s where the full return to the bottom line is expected to be in the coming months.” There will be more of this happening.”
At press time, Bitcoin was trading at $97,401.
Featured image from Shutterstock, chart from TradingView.com
