Bitcoin fell over 5% to an intraday low of $85,694, with liquidations reaching up to $646 million, primarily affecting long positions.
Ethereum dropped more than 6% to around $2,800, while XRP and other altcoins saw similar declines.
Market analysts point to thin liquidity, macro uncertainties, and specific risks like Tether’s stability as key drivers.
Bitcoin slid below $86,000 on December 1, marking a risk-off start to the month and extending November’s losses in the cryptocurrency market.
The price drop, which saw Bitcoin fall as much as 7% overnight, triggered a cascade of liquidations totaling between $500 million and $646 million across major exchanges. Long positions accounted for nearly 90% of the wiped-out leverage, highlighting overcrowded bullish bets.
Ethereum and other major altcoins were not spared, with ETH declining over 6% to near $2,800, and XRP shedding 6.5%, per reports from. This broad selloff erased recent gains and pushed the total crypto market capitalization lower amid thin weekend liquidity.
Analysts attribute the plunge to a combination of factors, including ongoing macroeconomic jitters and reduced expectations for Federal Reserve rate cuts. November’s $3.5 billion in outflows from spot Bitcoin ETFs—the largest since February—further pressured sentiment.
Additional concerns emerged around large holders and stablecoins. MicroStrategy CEO Phong Le’s comments on potentially selling Bitcoin to fund dividends if needed added to fears, given the firm’s $56 billion BTC holdings. BitMEX co-founder Arthur Hayes warned that a 30% drop in Bitcoin could render Tether insolvent, stating: “A roughly 30% decline in the gold, Bitcoin position would wipe out their equity, and then USDT would be, in theory, insolvent,”.
The yen carry trade unwind, estimated at $20 trillion, was also flagged as a potential global liquidity risk by investor Robert Kiyosaki, who advised accumulating Bitcoin and Ethereum amid the turmoil, per Bitcoin.com News.
While the event has cleaned out excessive leverage, experts like Sean McNulty of FalconX caution that structural headwinds persist: “We expect the structural headwinds to continue this month. We are watching $80,000 on Bitcoin as the next key support level,”.
Market participants now eye upcoming U.S. economic data and the Federal Reserve’s December meeting, where an 88% chance of a 0.25% rate cut could provide relief, according to the CME FedWatch tool cited in DL News. However, volatility may remain elevated as positioning resets.
Disclaimer: This article is for informational purposes only and does not constitute advice of any kind. Readers should conduct their own research before making any decisions.
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