Bitcoin’s recent price drop has led to a significant increase in liquidations, resulting in a loss of up to 11% in the total crypto market on December 9.
According to research from Ltrd, it was revealed that this crash was primarily driven by smaller traders rather than large investors. Bitcoin’s price dipped to $94,000, which was in line with earlier predictions and filled a market gap created on December 5.
Coinbase was identified as a key player in this situation, with aggressive selling starting almost an hour before the price collapse. This selling pressure triggered a cascade of liquidations, forcing overleveraged positions to be closed.
The total value of crypto liquidations reached $1.57 billion, with Bitcoin longs suffering $171.27 million in losses and Ethereum longs experiencing $235.04 million in liquidations. Ltrd highlighted that this event marked the largest liquidation since 2021, indicating a significant shift in market dynamics.
Despite the chaos, some traders view the elimination of excessive leverage as a positive step towards market stability. The forced liquidations are seen as a necessary correction that helps reset the market and stabilize altcoins, with some coins even surpassing key resistance levels and turning them into support.
Ltrd also observed unusual behavior in the altcoin market, with assets like XRP dropping by over 5%, which has sparked speculation about potential market manipulation or other factors contributing to the sudden volatility. The overall reaction of the market reflects a combination of resetting and lingering uncertainty about the underlying forces at play.