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The broader crypto market suffered a major crash on December 9. While the price of Bitcoin dropped from $101,109 to as low as $94,150, marking a -7% drop, the altcoin market lost the most. Ethereum is down -12% at the same time, XRP -22%, Solana -15%, Cardano -23%, Dogecoin -19%, and Shiba Inu -25%.
According to Coinglass data, more than 562,000 sellers were liquidated in the last 24 hours, and the total liquidation reached $1.7 billion. The largest liquidation order took place on Binance for the ETHUSDT pair, which amounted to $19.69 million. Of the $1.7 billion in total liquidations, $1.55 billion involved long positions.
Notably, Bitcoin’s leveraged flush was modest compared to that of altcoins, with $143 million worth of BTC long closed. In contrast, ETH saw $219 million in withdrawals, SOL $57 million, DOGE $86 million, XRP $53 million, and ADA $22 million.
In the entire crypto market, this represents the largest volatility since April 2021, when a record 10 billion dollars in crypto futures settlement occurred in one day. This exceeded the previous record of 5.77 billion dollars.
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After the exit, Bitcoin and many altcoins made a sharp recovery to the upside, although they have not yet returned to their pre-crash levels. In the last 24 hours, BTC is down by -2.4%, ETH by -4.8%, XRP by -9.6%, SOL by -6.4%, and DOGE by -8.4%.
What Caused the Crypto Market Crash?
According to crypto analyst ltrd (@ltrd_), the fundamental volatility started with the increase in selling pressure on Coinbase, where traders started selling aggressively about an hour before the big cascade. Although much of the decline was caused by a series of currency spreads, this prolonged sell-off in the stock market was instrumental in driving down prices in areas where overextended traders had no choice but to rest.
Overheated funds and rising open interest rates meant that as soon as the first cracks appeared, the most talked about positions had no chance of escape. “How can we tell if the market was overheated? Simple—Funding Fees and Open Interest Increases. These two factors are the cause of the current market and indicate that people are overpowered,” explained ltrd.
When the market finally crashed, its results were uneven. Bitcoin showed different characteristics than other metals, and Ethereum showed encouraging signs of accumulation on the way down, indicating that a large buyer could take advantage.
But the really amazing development happened with XRP on Coinbase, where, as ltrd put it, “You can see something opposite – the market effects of XRP on Coinbase are amazing. Something strange is happening. In a large, mature market, we’ve seen a lot of large orders cause the market to drop more than 5% We don’t know exactly what happened, but it’s very rare.” Ltrd speculated that these large and unusual orders came from a key player who was forced to pay at any price.
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“It may be necessary to monitor this situation in the next few days. Maybe a big player is forced to sell as if there is no future,” he said thoughtfully. The result of such an event, even in supposedly deep markets, was a quick crash that spilled over into endless trading elsewhere, causing further selling.
According to ltrd, “When something like this happens, it’s usually a bunch of unintended orders. Market makers absorb this selling pressure and hedge it, causing a signal spread throughout the market.” Even large altcoins like XRP, have market caps in proportion and major US companies, are still facing liquidity problems that are clearly under pressure. explaining how this contributes to the apparent evolution and dramatic nature of such events.
As prices finally stabilized and started to rise from the lowest points, ltrd highlighted how common this pattern is in overheated markets: “The next thing you always see in overheated markets is a rapid price reversal from the lowest point. There is a large amount of liquidation, limited funds, and still many profitable players who want to buy the dip. Let’s see who will come out on top.”
Macro analyst Alex Krüger put the whole event in a broader perspective. “Nothing has changed. Expect prices to rise further,” he said, while noting that future conditions, such as the pro-crypto US administration under Donald Trump, could set a positive backdrop for the digital asset.
Although Krüger indicated that there may be more increases in the coming months, he viewed these developments as normal forces. “Today was a big mistake. Especially in altcoins. It is very common in hot and highly leveraged markets. This is how crypto baptizes new entrants and keeps crypto natives sane,” Krüger said, adding “Don’t be happy to be caught too long in a strong exit. But it is what it is. The money returns to the base line across the board. This time is changing again. Expect a few more of these in the next few months.”
At press time, Bitcoin traded at $97,401.
Featured image from Shutterstock, chart from TradingView.com