Key Points
- Bitcoin’s fall below $100,000 triggered a liquidation of $412 million in leveraged positions within 24 hours.
- The market dip also affected other cryptocurrencies, causing widespread liquidations across various platforms.
Bitcoin’s sharp drop below $100,000 has caused significant panic among traders, leading to a $412 million liquidation of leveraged positions in just 24 hours. This market instability was a jolt for investors who had considered the six-figure milestone as a point of stability.
Data from CoinGlass reveals that approximately 79.57% of the liquidations were from long positions. Platforms such as Binance, OKX, KuCoin, and Bybit reported record-breaking losses.
Effects of Market Dip
The market dip affected a total of 161,442 traders, with Bitcoin (BTC) contributing around 12.62% or $52 million to the total.
The impact of the liquidation extended beyond Bitcoin, shaking the broader crypto ecosystem. Ethereum (ETH), often seen as the second pillar of the market, suffered $46 million in liquidations, primarily from long traders who expected a price surge above its current levels.
On December 6, Ethereum crossed the $4000 level for the first time since March 2024, but it still lacks the momentum to break out of the cycle. Despite the recovery, the digital asset is far from crossing its previous all-time high of 4,878, recorded in November 2021.
Altcoins Affected
Ethereum is not the only altcoin affected by the liquidation. Ripple’s XRP, Cardano, Dogecoin, and other cryptocurrencies collectively registered $108.02 million in liquidations.
The market meltdown can be traced back to geopolitical uncertainty. It started when South Korean President Yoon Suk Yeol announced the passage of martial law on live television on December 3. This announcement sent shockwaves through South Korea’s financial markets, including its crypto sector. The price of Bitcoin against the South Korean won dropped by 30% on local exchanges like Upbit, which rippled across global markets, pushing Bitcoin’s price as low as $96,000.
Adding to the confusion, President Suk Yeol had a sudden change of heart. The martial law declaration was lifted during a Cabinet meeting after 190 lawmakers in the 300-member parliament voted to reject the order. While the reversal eased political tensions, the damage to market confidence had already been done.
The geopolitical turmoil, along with fears over rising US Treasury yields and potential regulatory crackdowns, created the perfect storm for a market-wide sell-off. Leveraged traders bore the brunt as cascading liquidations accelerated the downturn, further destabilizing prices.
